Reuters was first to report that markets were closely watching the Central Bank decision on Thursday as Egypt struggles to contain the impact of a long-running foreign currency shortage, inflation at five-year highs and a rising debt burden. Recent Reuters analyses laid out how the Egyptian pound had come under renewed pressure and a program to sell off state assets had stalled, raising the stakes for the central bank’s interest rate meeting. Though the median forecast by analysts in a Reuters poll correctly predicted the 200 bps rate hike, expectations ranged from a hold on rates to a 300 bps raise, adding to uncertainty. The Central Bank had surprised analysts by keeping rates steady at its previous meeting.
Egypt’s cenbank raises interest rates by 200 bps to tame inflation
Since last March, the Egyptian pound’s official exchange rate has fallen by almost half, to around 30.87 pounds to the dollar, after Russia’s invasion of Ukraine exposed vulnerabilities in the country’s finances, prompting a foreign exodus from its treasuries market.