The Central Bank of Egypt (CBE) raised its overnight interest rates by 200 basis points (bps) amid the country’s high inflation rates.

The CBE set the lending rate at 19.25%, while the deposit rate at 18.25%.

The last meeting for the bank was on February 2, but the central bank left the interest rates steady. The bank says that the rates kept steady in February as it was already increased 800 basis points the pervious year. 

The country’s inflation had accelerated to a five-year high of 21.3% in December.

Meanwhile, the headline inflation soared in February to a five-and-a-half-year high of 31.9% from 25.8% in January. Core inflation in February went up to a record high of 40.3%, according to Reuters.

The Monetary Policy Committe said in a statement that it stresses that achieving a tight monetary situation is a necessary action to ensure the CBE’s upcoming inflation targets of 7% (± 2 percentage points) on average by 2024 Q4 and 5% (± 2 percentage points) on average by 2026 Q4. 

Domestic supply chain disruptions, a depreciating Egyptian pound, demand side pressures,and the seasonal impact of the fasting month of Ramadan, have fuelled inflation, the statement said.

The Egyptian pound’s official exchange rate has fallen to around 30.87 pounds to the dollar, according to news reports.

Meanwhile, the country’s real GDP growth went down to 3.9% in the fourth quarter of 2022, up from 4.4% in the third quarter of the same year, bringing the growth during the first half of the current FY 2022/23 to 4.2%.“ D ata for 2022 Q3 shows that growth was mainly  driven by improvements in private sector activity, specifically tourism, agriculture and trade , ” the CBE statement added.