The Monetary Policy Committee of the Central Bank of Egypt decided in its extraordinary meeting on Monday to raise the overnight deposit and lending rates.
The central bank’s main operation rate by 100 basis aims to reach 9.25%, 10.25% and 9.75%, respectively.
The credit and discount rate was also raised by 100 basis points to 9.75%.
A statement for CBE said on Monday that it is in the interest of the Central Bank to maintain macroeconomic stability and its gains.
This is in order that the Central Bank believes in the importance of exchange rate flexibility to serve as a tool to absorb shocks and maintain Egypt’s competitiveness.
“Given the central bank’s target inflation rate of 7% (±2 percentage points) on average during the fourth quarter of 2022; The Monetary Policy.
The Committee decided to raise the key interest rates of the central bank by 100 basis points,” the statement said.
The Monetary Policy Committee stressed that achieving low and stable inflation rates in the medium term is a prerequisite for supporting the purchasing power of the Egyptian citizen and achieving high and sustainable growth rates.
The Committee said it will closely follow all economic developments and will not hesitate to use all its monetary tools to achieve the goal of prices stability in the medium term.
Recently, global inflationary pressures began to re-emerge after signs of recovery for the global economy from the turmoil caused by the emerging coronavirus pandemic.
This is mainly due to the developments of the Russian-Ukrainian conflict; as the risks related to the global economy increased as a result of this conflict.
On top of these pressures is the noticeable rise in global commodity prices, supply chain disruptions and rising freight costs.
There is also an addition to the fluctuations in financial markets in emerging countries, which led to domestic inflationary pressures and increased pressure on the external balance.
Over the past period the Egyptian economic reform program succeeded in achieving many gains, on top of which is raising the efficiency of Egypt’s macroeconomic indicators; this paved the way for facing any challenge.
Economic turmoil that might arise as a result of mainly external factors.
The gains of the economic reform program had a great impact in protecting the economy from excessive volatility and crises, and the structural reforms adopted by the Central Bank and the Egyptian government.
This helped to provide exceptional economic measures and stimulus packages over the past two years with the aim of providing support to citizens and easing the burden on them during the coronavirus crisis.