The Central Bank of Egypt is expected to move towards stabilizing interest rates during the next meeting of the Monetary Policy Committee next Thursday. But over the past ten years, its prices have moved at large rates, ranging from record highs to significant declines.
In 2013, the interest rate was 8.25% for deposits and 9.25% for lending. In 2014, it rose to 9.25% for deposits and 10.25% for lending, an increase of 1%. It stabilized at this level during 2015.
In 2016, with the Egyptian government moving towards implementing the economic reform program and the decision to reduce the value of the pound against the dollar on the first of November 2016, the interest rate jumped to the level of 14.75% for deposits and 15.75% for lending, an increase of 5.5%.
Then the Central Bank continued to raise it during the year 2017 to record about 18.75% for deposits and 19.75% for lending, an increase of 4%. With the trend towards easing monetary policy, interest rates fell during 2018 to a record level of 16.75% for deposits and 17.75% for lending, a decrease of 2%.
During the year 2019, interest rates recorded a level of 12.25% for deposits and 13.25% for lending, a decrease of 4.5%. Then it continued to decline during the year 2020 to the level of 8.25% for deposits and 9.25% for lending, a decrease of 4%, coinciding with the emergence of the new Corona virus pandemic, and an extraordinary meeting was held at the Central Bank in March that witnessed the interest rate being reduced by 3% at once.
The year 2021 witnessed interest rates being fixed at 8.25% for deposits and 9.25% for lending. During the year 2022, interest rates jumped to the level of 16.25% for deposits and 17.25% for lending (an increase of 8%) after the Central Bank returned to raising interest rates for the first time in 5 years, with the repercussions of the Russian-Ukrainian war and the exit of $22 billion in indirect investments in a batch. One of Egypt is a gap in the provision of foreign exchange, the return of the black market for currency, and high inflation.
How have interest rates moved since the beginning of 2023?
At the current year level, on February 2, the Central Bank of Egypt decided to maintain the overnight deposit and lending rates and the main operation rate at the level of 16.25, 17.25, and 16.75%, respectively, while fixing the credit and discount rates at the level of 16.75%, in light of the annual rate of inflation in Urban growth of 21.3% recorded in December 2022, and annual core inflation rate of 24.2%.
On March 30, the Central Bank of Egypt decided to raise the overnight deposit and lending rates and the main transaction rate by 200 basis points at the levels of 18.25, 19.25, and 18.75%, respectively, while increasing the credit and discount rates at the level of 18.75%, in light of an annual inflation rate in Urban 25.8, 31.9% during the months of January and February 2023, and an annual core inflation rate of 31.2% last January.
On May 18, the Central Bank of Egypt decided to fix the overnight deposit and lending rates and the main operation rate at the level of 18.25, 19.25, and 18.75%, respectively, while keeping the credit and discount rates at the level of 18.75%, in light of the slowdown in the annual rate of urban inflation at the level of 30.6. % during last April.
On June 22, the Central Bank of Egypt decided to fix the last overnight deposit and lending rates and the main operation rate at the level of 18.25, 19.25, and 18.75%, respectively, while keeping the credit and discount rates at the level of 18.75%, even in light of the high annual rate of general and core inflation in urban areas. At 32.7 and 40.3% during May.
On August 3, the Central Bank of Egypt decided to raise the interest rate by 100 basis points, so that the overnight deposit and lending interest rates and the main operation rate would be at 19.25, 20.25, and 19.75%, respectively, and the credit and discount rates would be raised to 19.75%, in light of the high annual rate of inflation. In urban areas, it rose to 35.7% in June.
