People and vehicles are seen caught in a traffic jam in front of the Central Bank of Egypt's headquarters in downtown Cairo, Egypt, December 21, 2015 (Reuters)
The Central Bank of Egypt (CBE) has decided to raise interest rates by 50 basis points in an effort to mitigate inflation after the bank's Monetary Policy Committee (MPC) met on Thursday.
The bank raised the overnight deposit rate, the overnight lending rate and the rate of the CBE's main operation to 9.25 percent, 10.25 percent and 9.75 percent respectively, read the CBE's statement.
"Inflationary pressures have been slowly building up as evident in the increase in non-food prices, which have contributed to headline and core inflation rates," the bank said.
The bank also expected that inflation would continue to rise, despite the fall in prices internationally, due to "underlying domestic inflationary pressures."
Inflation climbed to 11.1 percent in November from 9.7 percent in the previous month.
Out of the five economists interviewed by Ahram Online earlier this week, three predicted that the CBE would raise interest rates, either fully or partially.
The Monetary Policy Committee (MPC) of the CBE postponed its rate decision last Thursday, 17 December, by one week, citing a need to achieve “full coordination and commitment on macroeconomic objectives with the government, including targets for fiscal consolidation, current account outturns and the implementation of urgent structural economic reforms,” according to its statement.