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What Does the Central Bank Raising Key Interest Rates Mean For Egyptians?

April 1, 2023

The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) announced the raising of key interest rates on 30 March, amid soaring inflation that has been affecting businesses and private citizens alike. The news made the rounds in Egypt as a major development, but to some, the aim of such a decision and its direct effects were unclear. Here, Egyptian Streets answers a few questions that may help clarify some of the details of this change. Why were the key interest rates raised and what does the decision aim to achieve? Interest rates are the percentage of return on deposits as well as the cost of borrowing money that is paid back along with the borrowed amount. Lower interest encourages people to spend, rather than save their money, and borrow and spend even more on housing or purchasing expensive goods, or investing in business, for example. On the other hand, higher interest rates encourage people to save more of their income, to benefit from the higher returns and avoid borrowing at a higher cost. By raising interest rates, the CBE has incentivised saving and depositing money, rather than…

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