Egypt central bank forecast to raise interest rates by 150 bps

The Central Bank of Egypt (CBE) is expected to hike its overnight interest rates by 150 basis points on Thursday as it keeps battling inflation after a series of currency devaluations, a Reuters poll showed on Monday.

The median forecast in a poll of 13 analysts is for the bank to increase its deposit rate to 17.75% and its lending rate to 18.75% at its regular monetary policy committee (MPC) meeting.

The central bank raised rates by a larger-than-expected 300 bps at its last meeting on Dec. 22 and by 200 bps at a surprise meeting on Oct. 27, when it also announced a staff-level agreement with the International Monetary Fund for a $3 billion financial rescue package.

Egypt requested the package soon after Russia invaded Ukraine a year ago, triggering a crisis in Egypt that bit into its tourism sector, raised the bill for commodity imports and led foreign investors to pull more than $20 billion out of the local treasuries market.

“We expect the CBE to hike policy rates this Thursday by at least 100 bps, said Noaman Khaled, an economist with NBK. “We see it as important for the CBE to act before the inflation print comes out next week which we anticipate at around 23-24%.”

Annual inflation jumped to a five-year high of 21.3% in December from 18.7% in November.

This report’s information was first seen on REUTERS; to read more, click this link.