The Monetary Policy Committee of the Central Bank of Egypt (CBE) decided that the interest rates will increase 1 percent, according to a monthly report.
The rates of the overnight deposit and lending yield were raised by 100 basis points, to reach 19.25%, 20.25%, and 19.75%, respectively. The credit and discount rates were raised by 100 basis points to 19.75%.
The CBE has kept the interest rate unchanged three times during the current year 2023.
The Central Bank mentioned that the annual rate of general inflation in urban areas went up to 35.7% in June 2023 from 32.7% in May 2023, and the annual rate of core inflation increased to 41.0% in June 2023 from a rate of 40.3% in May 2023.
The high inflation rate was driven by a broad-based rise in the prices of most consumer price index items.
In light of the increased inflation rates, and taking into account the balance of risks surrounding inflation, the Monetary Policy Committee decided to raise the basic interest rates at the Central Bank by 100 basis points -1% to avoid inflationary pressures and control inflation expectations.
The CBE’s monetary policy committee sees that inflation rates are expected to peak in the second half of 2023, before returning to the previously announced target inflation rates, supported by restrictive monetary policies. The Monetary Policy Committee report added that the course of basic interest rates depends on expected inflation rates and not the current inflation rates.
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