The Central Bank of Egypt (CBE) on Thursday raised its key interest rates by 200 basis points (bps).

Following a meeting of its Monetary Policy Committee (MPC), the bank set the overnight lending rate at 19.25% and the overnight deposit rate at 18.25%. 

The central bank's proactive policy aims to control inflationary pressures and reduce inflation expectations to the target level of 7% ± 2% on average during Q4 2024.

In a meeting held on February 2, the committee had decided to keep rates at 16.25% for deposits, 17.25% for lending, and 16.75% for the credit and discount.

In 2022, the apex bank raised interest rates four times to 800 bps, out of which 500 bps was hiked in Q4 to curb the mounting inflation. 

HSBC and Goldman Sachs Group had predicted a 300 bps hike in interest rates in today's MPC meeting. 

While the US investment bank expected interest rates to increase due to February’s inflation that went beyond forecasts, HSBC noted that the interest rate hikes will put more burden on borrowing and slow growth rate.

The median forecast in a Reuters poll of 15 analysts was for the CBE to hike rates by 200bps. Seven of the analysts expected a hike of 300bps.

(Reporting by Seban Scaria; editing by Daniel Luiz)