CAIRO, Mar 17 (Aswat Masriya) – Egypt's central bank raised the key interest rates by 1.5 per cent (150 basis points) during its Monetary Policy Committee meeting on Thursday.

This comes after the Central Bank of Egypt (CBE) devalued the Egyptian pound on Monday by 14.5 per cent, such that the Egyptian pound reached 8.85 against the dollar instead of 7.73. On Wednesday, the Egyptian pound was raised 7 piasters, to reach EGP 8.78 against the dollar.

The Monetary Policy Committee (MPC) raised the overnight deposit rate to 10.75 per cent from 9.25 percent and raised the overnight lending rate from 10.25 per cent to 11.75 per cent, according to a statement.

This is the second time the key interest rates are raised since Central Bank Governor Tarek Amer took office in November.

In December, key interest rates were raised by 50 basis points. The overnight deposit rate was raised from 8.75 per cent to 9.25 per cent and the overnight lending rate was raised from 9.75 per cent to 10.25 per cent.

Five banks had expected the CBE to significantly increase the interest rates in today's MPC meeting with the aim of curbing inflation, inhibiting 'dollarisation' and attracting foreign investment in government debt instruments.

EFG-Hermes, Beltone Financial and Prime Holding had expected an increase of 1 per cent, while CI Capital expected a raise of 0.5-1 per cent and UAE's Argaam Capital expected an increase of 0.75 per cent.

The monthly inflation rate had climbed by 1.1 per cent in February compared to the month before, triggered by a hike in prices of rice, poultry, vegetables, sugar, oils and water. However, the annual inflation rate has decreased from 10.7 per cent in January to 9.5 per cent.

Egypt has been facing mounting pressure to devalue the currency and has been rationing dollars to keep the pound artificially strong at 7.7301 pounds. It has indirectly raised interest rates and injected dollars into the banking sector to relieve the pressure on the currency, Reuters reported earlier.