Will the Central Bank of Egypt’s decision to fix interest rate be reflected in prices?

The Central Bank of Egypt on Thursday moved to fix the base interest rate at its eighth and final meeting during 2023, according to a statement from the Monetary Policy Committee

Accordingly, the deposit rate will be maintained at 19.25 percent with lending at 20.25 percent, while deposit and discount rates are maintained at 19.75 percent.

The bank raised the interest rate during the last 22 months by 11 percent on six occasions, including three percent during the current year on two occasions, two percent in March and one percent in August, with the aim of curbing accelerating inflation.

According to the CBE, the core inflation rate declined for the fifth time in a row – recording 35.9 percent in November.

How is the decision reflected in prices?

Economist Rashad Abdo explained that the best solution is to stabilize the interest rate, as stated by the CBE’s decision, as other scenarios of raising interest rates effect many areas that in turn impact the economic situation in Egypt.

Raising the interest rate would have brought a major crisis in investment and attracting investors to open new projects, he said, therefore the matter would reflect in the unemployment rate, while every year universities and institutes have new graduates.