The Central Bank of Egypt's Monetary Policy Committee decided to raise key interest rates by 100 basis points, or 1%, in light of economic developments, unfavorable external conditions and rising uncertainty.

Under the decision, the overnight deposit rate rose to 20% and the overnight lending rate to 21%, while the CBE's main operation rate and the credit and discount rate both rose to 20.5%.

In this report, Banky explains how the CBE's latest 1% rate hike affects holders of certificates and other savings products.

Certificate Holders

The CBE's decision affects holders of floating-rate certificates, whose interest rates will rise automatically by 1%.

Existing customers:

Floating-rate certificate holders are the group most affected by the CBE's latest decision, as interest rates on floating-rate certificates, which are closely tied to the CBE corridor rate, rise automatically. Holders of fixed-rate certificates, by contrast, will see no change: the interest on their savings will stay as it is until the certificate matures.

Future Customers

Most banks are expected to raise interest rates in the coming period in response to the CBE's latest decision, with rates on savings certificates, both fixed and floating, rising by amounts that vary from bank to bank.

Account and Deposit Holders

Most banks will set interest rates on all their savings products in the coming period. Rates on savings products, whether accounts or deposits, are expected to rise by amounts that vary from bank to bank, depending on the meeting of each bank's ALCO committee, which sets the bank's interest rates after studying the market.

The decision will also affect interest rates on loans, including personal loans, mortgages and car loans, as banks move to raise rates on them.