The Central Bank of Egypt decided to raise interest rates Thursday.
The bank’s Monetary Policy Committee decided to raise several loan and deposit rates by 3%. The committee justified the decision by saying the outlook for international commodity prices is “uncertain.” It specifically mentioned the global economic downturn, COVID-19 restrictions in China and supply chain disruptions related to the Russian invasion of Ukraine.
Why it matters: Egypt’s Central Bank raised interest rates in March due to rising inflation in the country in its first rate hike since 2017. Egypt raised rates again in May and October.
Like other countries in the region, Egypt is suffering from inflation. Some Egyptians have been forced to buy essentials on credit due to the rising prices. The supply chain shocks related to the Ukraine war have affected the whole region. Egypt has been especially affected since it imported most of its grain from Russia and Ukraine before the war.
The rate hike could reflect the Egyptian government’s view that inflation will continue to be a problem in 2023.
Urban inflation in Egypt was 2.3% in November, according to the Central Bank.
Egypt’s December interest rate increase is a fairly big one. By comparison, the US Federal Reserve raised rates by just 0.5% this month.
Know more: The Turkish Central Bank also held a meeting on interest rates Thursday and decided to keep them unchanged, despite out-of-control inflation.