RIYADH: The Central Bank of Egypt decided on Thursday to keep interest rates unchanged, in contrast to the move by the US Federal Reserve.

Fed chairman Jerome Powell confirmed on Wednesday interest rates would be raised 75 basis points, taking the policy rate to 3.0-3.25 percent — a 14-year high for the US.

Gulf countries including Saudi Arabia and the UAE responded by lifting their rates, but Egypt has decided to maintain its levels, with the CBE’s Monetary Policy Committee keeping the deposit rate at 11.25 percent and its lending rate at 12.25 percent, it said in a statement.

The committee pointed out that despite the high annual rates of inflation, monthly rates “recorded lower rates compared to the highest levels recorded during the months of March and April 2022.”

It also indicated that it will continue to assess the impact of its previous decisions to raise basic interest rates by 300 basis points during 2022, which “is still having an impact on the economy.”

The Monetary Policy Committee’s report alluded to the relatively low global prices of some basic commodities, such as oil, as a result of “decreased demand due to expectations of a global recession.”

The CBE has also announced the percentage of cash reserves that banks are committed to maintaining has been increased from 14 percent to 18 percent.

Raising the mandatory reserve for banks is a measure aimed at absorbing liquidity in specific circumstances, and the last time it was used was in 2017, Asharq reported citing an official source in the CBE.

The source revealed that the average liquidity targeted to be absorbed from the money supply under the new measure is between 140 and 150 billion Egyptian pounds ($7.18 billion to $7.7 billion).

The source alluded to the trend of open market operations to absorb excess liquidity in the banking market, which is estimated at 600 billion pounds.