Cairo, Mar 31 (IANS): Egypt's Monetary Policy Committee (MPC) decided to raise the interest rates of the central bank by 200 basis points in a new bid to contain high inflation,

In a statement on Thursday, the Central Bank of Egypt (CBE) said the deposit and lending rates were raised to 18.25 per cent and 19.25 per cent, respectively, while the rate of the main operation and the discount rate were increased to 18.75 per cent, Xinhua news agency reported.

Egypt has been struggling to contain rising inflation over the past years, amid a shortage of foreign currency caused by the global economic repercussions of the Covid-19 pandemic and the ongoing Russia-Ukraine war.

Egypt's annual urban headline inflation increased to a record high of 25.8 per cent and 31.9 per cent in January and February 2023, respectively.

Similarly, the annual core inflation recorded 31.2 per cent in January and 40.3 per cent in February 2023, marking a historical high, the CBE said.

The central bank's interest rate hike came a week after the US Federal Reserve raised its key interest rate by 0.25 percentage point on March 22.

Egyptian economist Rashad Abdo said that the move will encourage citizens to deposit their money so to decrease demand for products in the markets, which would help reduce prices and lower inflation.

"More importantly, it encourages people not to dollarize their Egyptian pounds since the local currency interest rates in Egyptian banks are very high," Abdo, also head of the Egyptian Forum for Economic and Strategic Studies, told Xinhua.