enar

Egypt Inflation Has Peaked, Central Bank Governor Amer Says

Egyptian Central Bank Governor Tarek Amer said that inflation in Egypt has peaked after policy makers responded to the surge in prices by raising borrowing costs to the highest level in more than a decade. (Source: Bloomberg News)

“We are in the right direction and we are moving very fast,” Amer said in an interview with Bloomberg TV in Dubai. “We’ve been aggressive in our monetary policy, and this has been resisted a bit. But we thought it’s important so we can get our shop fixed very quickly.”

Egypt in November became the first Arab country to liberalize the exchange rate as part of a sweeping program to restore investor confidence in an economy beaten by years of unrest. The government also reduced fuel and electricity subsidies. The plan helped secure a $12 billion IMF program in November and encouraged investors to pour about $16 billion into local-currency debt, attracted by one of the world’s highest yields.

Inflation has also surged to more than 30 percent, the highest level in decades. In response, the central bank has raised interest rates 700 basis points, or 7 percentage points to 18.75 percent for the benchmark overnight deposit rate.

The Monetary Policy Committee said in July that it sees a “measured easing of the monetary policy stance to allow for a reduction in interest rates” as soon as “underlying inflation” starts to moderate.