Egypt cbank ups rates to curb inflation
Cairo, May 9, 2008
The Egyptian central bank said on Friday it raised its key overnight interest rates for the third time this year to contain inflation expectations after recent government decisions to raise the prices of fuel and cigarettes.
The monetary policy committee (MPC) of the central bank said in a statement it decided at its meeting late on Thursday to lift its overnight deposit rate and lending rate by 50 basis points to 10 percent and 12 percent respectively. It last raised the rates on March 23.
'Despite tentative signs of moderation in international wheat prices, the domestic inflation outlook is affected by the latest regulated price adjustments,' the statement added.
Egypt's parliament approved steep increases in fuel and cigarette prices and vehicle licence fees on Monday to cover the costs of public-sector pay hikes that President Hosni Mubarak proposed last week.
The central bank statement said the immediate one-off effect of the price rises and their the consequent second round effect pose an upside risk to inflation prospects.
Urban inflation in Egypt rose to 16.4 percent in the year to April, from 14.4 percent in the year to March, the state statistics agency Capmas said on Thursday.-Reuters