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Pound’s plunge has Egypt poised for another rate hike

Authorities need to quell inflation made worse by devaluations. Rate rise would be the fifth by regulator in less than a year.
03.02.23 | Source: Bloomberg

Egypt’s latest dramatic currency devaluation may leave authorities with little choice but to deliver another interest-rate hike to curb inflation that’s already running at a five-year high.

With soaring prices piling pain on consumers in the Middle East’s most populous country, seven of 10 economists surveyed by Bloomberg predict the central bank will raise interest rates for the fifth time in less than a year on Thursday, in forecasts ranging from one to two percentage points. The other three expect the benchmark deposit rate to stay at 16.25%.

“The battle against inflation is still in its early stages,” said Mohamed Abdelmeguid, Middle East and North Africa economist at BNP Paribas. A hike in local fuel prices is widely expected soon and would add more pressures.