The central bank of Egypt has declared a 2% increase in interest rates.
2 min read
Announced by Egypt’s central bank on Thursday that it raised up the key interest rates by 2%
Announced by Egypt’s central bank on Thursday that it raised the key interest rates by 2% and switched to a more flexible exchange rate system in a bid to combat the country’s mounting economic issues.
Egypt is trying to secure a new loan from the International Monetary Fund after its economic woes deepened due to the war in Ukraine. The fund has long been urging Egypt to allow greater exchange rate flexibility.
The bank’s Monetary Policy Committee said in a statement that it had raised the new lending rate to 14.25% and the deposit rate to 13.25%. The discount rate was also raised to 13.75%, it said.
Also, the bank announced, it had moved to “a durably flexible exchange rate” system, a change that would allow the international markets to “determine the value of the Egyptian pound against other foreign currencies.”
The actions are intended to lessen the financial strain on lower- and middle-income households and counteract rising inflation, which reached 15% in September. The adjustments come as the Egyptian government continues its months-long discussions with the International Monetary Fund for a new loan to fund a reform plan that would assist in addressing the nation’s struggling economy.
The coronavirus pandemic and the war in Ukraine, which have disrupted international markets and raised oil and food prices globally, have had a significant negative impact on the Egyptian economy. The majority of the wheat Egypt imports comes from Russia and Ukraine, making it the largest importer in the world. The nation’s supply is susceptible to shifts in price on the global market.
The National Bank of Egypt supplied data showing that after the bank’s announcement, the value of the Egyptian Pound decreased from roughly 19.75 Pounds to a Dollar to at least 22.50 Pounds to a Dollar.
The bank stated, “Egypt is committed to stepping up its reform agenda to ensure macroeconomic stability and promote strong, sustainable, and inclusive growth.”
