CBE increases interest rates in effort to address inflation
Date
1/29/2024 4:23:21 AM
(MENAFN) In an anticipated move aimed at stabilizing financial markets and curbing inflation, the Central bank of Egypt is set to convene its first meeting of 2024 next Thursday, with expectations indicating an interest rate hike. Six out of ten investment banks foresee an increase ranging between 200 and 300 basis points, highlighting the central bank's commitment to addressing the mounting inflationary pressures.
This strategic measure aligns with the Egyptian government's broader efforts to bolster economic and financial stability. Over the past two years, the Central Bank has already implemented significant interest rate hikes, amounting to an 11-percentage-point increase. Presently, interest rates stand at 19.25 percent for deposits and 20.25 percent for lending.
The decision to raise interest rates comes against the backdrop of escalating costs of essential services in Egypt. The onset of the new year witnessed price hikes in electricity, metro and railway tickets, as well as increases in the prices of internet and communication services. These factors contribute to the prevailing economic challenges that the Central Bank aims to address through monetary policy adjustments.
Ahmed Hafez, the head of the research sector at Beltone Financial Holding Company, views the anticipated interest rate hike as a proactive measure to counter inflationary pressures. The recent surge in the prices of basic goods and services has exacerbated inflation, prompting the central bank to take measures aimed at achieving a delicate balance between economic stability and inflation control.
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