CAIRO, Dec. 22 (Xinhua) -- Egypt announced on Thursday to raise the interest rate by 300 basis points to contain soaring inflation.
In Thursday's meeting, the Monetary Policy Committee (MPC) in Egypt decided to raise the central bank's deposit rate to 16.25 percent and lending rate to 17.25 percent, said the MPC in a statement.
"The MPC decided to raise key policy rates by 300 bps to contain inflationary pressures and to steer annual headline inflation rates towards its upcoming targeted levels," it said.
Egypt's annual urban consumer inflation rate "continued to accelerate," rising from 16.2 percent in October to 18.7 percent in November, the highest rate since December 2017 when it reached 21.9 percent.
"Similarly, annual core inflation continued its upward trend that started over a year ago, recording 21.5 percent in November 2022, its highest rate since November 2017," according to the MPC.
The Egyptian economy has been greatly affected by the COVID-19 pandemic and Russia-Ukraine conflict that led to increase in cost of food and oil imports, given that the most populous Arab country is one of the world's largest importers of wheat, most of which came from Russia and Ukraine.
The MPC said that on the global front, forecasts for international commodity prices have slightly eased compared to those underlying the previous MPC meeting. "Nonetheless, the outlook for international commodity prices remains uncertain," it said.
The rising inflation in Egypt followed two devaluations of the Egyptian pound against the U.S. dollar this year, the latest of which was on Oct. 27 when Egypt's central bank lowered the value of the pound about 14.5 percent, and has since been allowing it to weaken gradually.
Last week, the International Monetary Fund (IMF) approved a loan of 3 billion U.S. dollars to Egypt over 46 months as a support package to help the country with structural and economic reforms.
The IMF said that the financial support was granted in exchange for an economic reform program by the Egyptian government, which it hopes can pave the way for "sustainable, inclusive and private-sector-led growth." ■