{"id":326416,"date":"2022-10-27T10:08:01","date_gmt":"2022-10-27T10:08:01","guid":{"rendered":"https:\/\/egy-africa.com\/en\/?p=326416"},"modified":"2022-10-27T10:08:01","modified_gmt":"2022-10-27T10:08:01","slug":"egypt-raises-rates-moves-to-flexible-exchange-rate-regime","status":"publish","type":"post","link":"https:\/\/egy-africa.com\/en\/2022\/10\/27\/egypt-raises-rates-moves-to-flexible-exchange-rate-regime\/","title":{"rendered":"Egypt raises rates, moves to flexible exchange rate regime"},"content":{"rendered":"<p>The Central Bank of Egypt on Thursday raised interest rates by 200 basis points in a special meeting of its monetary policy committee (MPC).<\/p>\n<p>The bank also announced that it is moving to a \u201ca durably flexible exchange rate regime, leaving the forces of supply and demand to determine the value of the EGP against other foreign currencies&#8230;\u201d.<\/p>\n<div class=\"teads-adCall\"><\/div>\n<p>The central bank&#8217;s MPC set the overnight lending rate at 14.25% and the overnight deposit rate at 13.25%. The discount rate was also raised by 200 basis points to 13.75%.<\/p>\n<p>&#8220;The objective of raising policy rates is to anchor inflation expectations and contain demand side pressures, higher broad money growth and second round effects of supply shocks,&#8221; the central banks said in a statement.<\/p>\n<p>London-based consultancy Capital Economics said in a note on Thursday that it &#8220;wouldn&#8217;t be surprised if it delivered a bit more tightening over the coming months&#8221;.<\/p>\n<p>Bankers and economists have long argued that the EGP is overvalued against a strengthening dollar. Earlier this week, the Central Bank governor Hassan Abdalla said Egypt will develop a new currency indicator to change the perception that the Egyptian pound should be pegged to the US dollar.<\/p>\n<p>Capital Economics said the move to flexible exchange rate will result in the pound falling 18% to 24\/$ by end-2023 if not sooner. &#8220;The move will result in some short-term economic pain but it will help to get an IMF deal over the line and go a long way to restoring macroeconomic stability.&#8221;<\/p>\n<p>Dubai-based lender, Emirates NBD said the CBE rate hike aligns well with securing the IMF deal. &#8220;The unscheduled move by the CBE could presage a finalisation of the deal over the coming days, especially as the exchange rate issue had been one of the final sticking points according to IMF head Kristalina Georgieva,&#8221; Emirates NBD noted.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Central Bank of Egypt on Thursday raised interest rates by 200 basis points in a special meeting of its monetary policy committee (MPC).<\/p>\n","protected":false},"author":2,"featured_media":321424,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[22,33],"tags":[222],"class_list":["post-326416","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","category-main","tag-central-bank-of-egypt-cbe"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.3 - 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