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Egypt surprisingly hikes interest rates

by ChemOrbis Editorial Team -
  • 24/05/2017 (12:13)
According to media reports, Egypt’s central bank raised its interest rates by 200 basis points on the back of stronger economic growth and a decline in unemployment. This was the first rate hike following an increase of 300 basis points in November, which surprised the economists who were expecting the interest rates to remain unchanged.

Accordingly, the bank raised its overnight deposit rate from 14.75% to 16.75% and its overnight lending rate from 15.75% to 17.75%.

The country had floated its currency last November, after which the inflation has climbed to an almost thirty-year high by 31.5%.

IMF has recently mentioned the significance of lowering inflation in maintaining the economic reform program and accordingly, interest hikes could help achieve this. However, some economists think that higher interest rates cannot be effective in reducing inflation, but only cause investments to reduce.
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