Insights into Egypt’s Interest Rate Hike- Reasons and Details Explained

The statement of the Central Bank of Egypt reveals the details of the decision of the Monetary Policy Committee to raise interest rates today, Thursday, by 200 points.

And the Monetary Policy Committee of the Central Bank of Egypt decided at its meeting on Thursday, March 30, 2023 to raise the overnight deposit and loan income rates, as well as the price of the central bank’s main operation by 200 basis points, to reach 18.25 %, 19.25% and 18.75%, respectively, and the lending rate was also increased. And the discount is 200 basis points, reaching 18.75%.

At the global level, the Monetary Policy Committee of the Central Bank of Egypt added in a statement that global commodity price expectations have declined from those presented to the Monetary Policy Committee at its previous meeting. However, the uncertainty associated with the prospects for these prices persisted.

Further in the statement, the most important of which are the outlook for imbalances in global supply chains and expectations for global economic activity in light of the lockdown policies accompanying the coronavirus pandemic in China, in addition to recent developments in the financial sector in an advanced economy. These events have been reflected in significant fluctuations in the financial conditions of the US and European Union economies, which confirms the high level of uncertainty associated with the global economy.

At the local level, the growth rate of real economic activity slowed slightly to a record 3.9% in the fourth quarter of 2022, compared to a growth rate of 4.4% in the third quarter of 2022. Thus, the first half of fiscal year 2022/2023 recorded a growth rate of 4.2%.

Detailed data for the third quarter of 2022 show that growth in private sector economic activity, especially the tourism sector, was driven by real GDP, agriculture, wholesale and retail trade.

In addition, most of the preliminary indicators continued to record positive growth rates during the first quarter of 2023. GDP growth in fiscal year 2022/2023 is expected to be moderate compared to the previous fiscal year, i.e. again after that.

In terms of the labor market, the unemployment rate in the fourth quarter of 2022 was 7.2% compared to 7.4% in the third quarter of 2022.

Source: RT