In a surprise move, the Central Bank of Egypt announced a 1 percent (100 basis points) hike in overnight interest rates.
The bank said its decision is aimed at containing inflationary pressures and anchor inflation expectations.
The lending rate is increased to 20.25 percent and the deposit rate to 19.25 percent, the bank’s Monetary Policy Committee said in a statement on Thursday, Reuters reported.
“The MPC judges that inflation rates are likely to peak in the second half of 2023 before beginning a disinflation path towards the CBE’s preannounced targets afterwards, supported by the cumulative monetary policy tightening to date,” the statement said.
The bank’s move surprises the market as several analysts expected the bank to leave rates unchanged.
The decision, however, comes as the country’s annual urban inflation accelerated to an all-time high of 35.7 percent in June from 32.7 percent in May.
The central bank has been targeting inflation of 5 percent to 9 percent by the final quarter of 2023 and 3-7 percent by the end of 2026.