Egypt Raises Rates as Central Bank Sets Targets With Government

Egypt raised interest rates for the first time in more than a year in an attempt to curb inflation, and the central bank said it has agreed with the government to collaborate on designing policies that “will contribute positively to economic growth and job creation.”

The Monetary Policy Committee, headed by Governor Tarek Amer, increased the benchmark overnight deposit rate by 50 basis points to 9.25 percent, according to a statement on the central bank’s website. The overnight lending rate was also increased by the same amount to 10.25 percent. Headline urban inflation accelerated to 11.1 percent at the end of November, the highest in five months.

“The MPC judges that a rate hike is warranted to address inflationary pressures and anchor inflation expectations,” the bank said in the statement.

The decision comes amid a dollar crunch threatening Egypt’s fragile economic recovery, triggering speculation that the central bank may loosen its grip on the pound. Officials have blamed part of the foreign-currency squeeze on imports of goods they say Egypt doesn’t need.