The Central Bank of Egypt - File photo
CAIRO – 23 May 2017: The surprising decision of the Central Bank of Egypt (CBE) to increase interest rates by 200 basis points comes at an inconvenient time for the Egyptian industry, Federation of Egyptian Industries (FEI) said in a Monday statement.
In an unexpected move on Sunday evening, the CBE decided to surge its deposit rate to 16.75 percent from 14.75 percent and its lending rate to 17.75 from 15.75 percent.
This the second instance since the CBE raised the rates by 300 basis points the same day it free-floated the Egyptian pound on November 3.
The industry sector has exerted strenuous efforts in order to recuperate after a series of shocks that followed the economic reforms taken by the government, including the flotation of the local currency, increasing taxes and slashing energy subsidies, Chairperson of FEI Mohamed el-Sewedy said in the statement.
This decision will place an extra burden that will limit the capability to lure new investments or compete with imports from other countries both in the local and foreign markets, he said.
In this regard, Sewedy asked the CBE to allocate funds for the industry sector at a low interest rate.