The Central Bank of Egypt decided today (Thursday) to raise interest rates by 2% on deposits and lending to curb inflation , during a meeting of the bank's Monetary Policy Committee.

The bank said in a statement on its official website that the Monetary Policy Committee of the Central Bank of Egypt decided, in its meeting today, to raise the rates of the one-night deposit and lending return and the price of the main operation of the Central Bank by 200 basis points, to reach 18.25%, 19.25% and 18.75%, respectively. .

The Monetary Policy Committee of the Central Bank of Egypt also decided to raise the credit and discount rate by 200 basis points, to reach 18.75%.

The Central Bank of Egypt statement pointed to a slight slowdown in the growth rate of real economic activity, to record 3.9% during the fourth quarter of 2022, compared to a growth rate of 4.4% during the third quarter of 2022, and the first half of the fiscal year 2022/2023 recorded a growth rate of 4.2%. .

With regard to the labor market, the unemployment rate recorded 7.2% during the fourth quarter of 2022, compared to a rate of 7.4% during the third quarter of 2022.

The annual rate of urban general inflation continued to rise, to record 25.8% and 31.9% in January and February 2023, respectively, indicating that these increases reflect many factors, which include imbalances in supply chains locally and fluctuations in the exchange rate of the Egyptian pound, in addition to pressures from the side. Demand, which is evident in the developments of real economic activity compared to its maximum production capacity and the rise in the domestic liquidity growth rate.

The statement noted that, in light of the above, the Monetary Policy Committee decided to raise the basic interest rates by 200 basis points, stressing that the path of the basic interest rates depends on the expected inflation rates and not on the prevailing inflation rates.

The committee stressed the need to restrict monetary policy as a prerequisite for achieving the inflation rates targeted by the Central Bank of Egypt, which amount to 7 ± (2 percentage points) on average during the fourth quarter of 2024, and 5 ± (2 percentage points) on average during the fourth quarter of 2024. Year 2026.

On December 22, 2022, the Monetary Policy Committee of the Central Bank of Egypt decided to raise the rates of the one-night deposit and lending return and the price of the main operation of the Central Bank by 300 basis points, or by 3 percent.

The Central Bank of Egypt stated in a statement at the time that the bank’s Monetary Policy Committee decided to raise the rates of the overnight deposit and lending return and the price of the main operation of the Central Bank by 300 basis points, to reach 16.25 percent, 17.25 percent, and 16.75 percent, respectively.

The committee also decided to raise the credit and discount rate by 300 basis points, to reach 16.75 percent.