Loading ...Egypt Central Bank Raises Interest Rates By 50 Basis Points |
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Friday, May 09, 2008
CAIRO (Dow Jones)--The Central Bank of EgyptCentral Bank of Egypt
said Friday its monetary policy committee decided to raise overnight deposit and lending rates by 50 basis points to 10% and 12% respectively, in an effort to contain rising inflation.
Headline consumer price inflation maintained its upward trend in April, reaching 16.4%, as domestic food inflation soared to 22%, driven by rising food prices, the central bank said in a statement on its Web site.
The bank said that despite signs of moderation in international wheat prices which could ease food inflation, domestic inflation would be affected by the latest price adjustments approved by the country's parliament Monday.
Egypt's parliament approved price increases for gasoline, diesel and cigarettes, amongst other measures, to fund a 30% hike in wages of government employees announced by President Hosni Mubarak May 1.
"While the immediate one-off effect would be reflected in the next inflation reading, the consequent second-round effects of these price adjustments pose an upside risk to the inflation prospects," the central bank statement said.
Annual inflation rates are expected to remain high until the combined effect of price increases related to the international food-price shock and regulated price adjustments taper off, the bank said.
The monetary policy committee last raised interest rates at its March 23 meeting by 50 basis points due to the persistent increase in food inflation.
The committee said it would continue to closely monitor all economic developments and will adjust key rates, if needed, to ensure price stability over the medium-term.
-By Maha El Dahan, contributing to Dow Jones Newswires, +20122267850, mahaeldahan@yahoo.com
(END) Dow Jones Newswires
09-05-08 0840GMT
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| EGYPT |
