Egypt's central bank, faced with accelerating inflation, late on Thursday raised its key interest rates by 200 basis points for the second policy meeting in a row. At a meeting of its Monetary Policy Committee, the bank raised the overnight deposit rate to 18.75 percent from 16.75 percent and its overnight lending rate to 19.75 from 17.75 percent, it said in a statement, after hiking them by 200 points each at the last policy-setting meeting in May. Egypt floated its currency in November, and since then its pound has roughly halved in value. As the currency's value dropped, inflation surged. Although the core rate slipped in May, it remains almost 30 percent year-on-year. The central bank raised interest by 300 basis points after the currency floatation, which helped Egypt clinch a three-year $12 billion International Monetary Fund lending program tied to ambitious reforms such as tax hikes and subsidy cuts. The IMF has said lowering inflation is key to keeping its economic reform program on track and that raising key interest rates could be an appropriate tool for doing so.
