Explanation of the raising of interest rates by 200 bps
The Monetary Policy Committee (MPC) in its meeting on Thursday 30/3/2023 decided to raise the Central Bank of Egypt’s (CBE) overnight deposit rate, overnight lending rate, and the rate of the main operation by 200 bps to 18.25 percent, 19.25 percent, and 18.75 percent, respectively. The discount rate was also raised by 200 bps to 18.75 percent.
On the global front, forecasts for international commodity prices have eased compared to those underlying the previous MPC meeting, but their outlook remains uncertain, CBE said in a statement to explain the reasons behind the committee’s decision. Notable factors include the outlook for global supply bottlenecks and global economic activity, especially in light of the reopening in China coupled with the recent financial sector issues in advanced economies, it said. The latter factor has contributed to large volatility in financial conditions indices in key markets such as the US and EU, which confirms an increased level of uncertainty regarding the global economic outlook, it added.