The Central Bank of Egypt raised its key interest rates by 200 basis points on Sunday, citing stronger economic growth and falling unemployment, confounding the expectations of economists who forecast rates were unlikely to change. This was the bank’s first increase in rates since an aggressive hiked of 300 basis points in November. The IMF has said lowering inflation is key to keeping its economic reform program on track and said as recently as last week that raising key interest rates could be an appropriate tool for doing so. “We believe that a hike in the CBE corridor interest rates might not be the appropriate tool to curb inflation and would render investment irrational at such high cost of debt rates,” said a research note from Arqaam Capital. Economists polled by Reuters last week overwhelmingly expected rates to remain unchanged, with 13 of 14 economists predicting them to stay put amid lower lending growth in recent quarters.

Source: Egypt Independent May 22, 2017 11:26 UTC