Egypt cuts interest rates

Egypt cut interest rates for the first time since floating the currency at the end of 2016, starting a widely-anticipated easing cycle after record-high borrowing costs helped curb inflation and attract $20 billion into local-currency debt.

The monetary policy committee led by Governor Tarek Amer lowered the overnight deposit rate by 100 basis points to 17.75 percent. A cut was predicted by six out of nine economists in a Bloomberg survey. The overnight lending rate was also reduced by 100 basis points to 18.75 percent.

The central bank had raised borrowing costs by 700 basis points after it abandoned currency restrictions as it sought to control inflation and stabilize the pound. The measures helped secure a $12 billion International Monetary Fund loan, ease a crippling dollar shortage and unleash a deluge of foreign inflows into Egypt’s high-yielding debt.

The decision comes amid concerns over the impact of rising U.S. interest rates on emerging markets. But with inflation easing for a sixth month in January to 17.1 percent from a peak of 33 percent, the cut “does a great job of balancing global risks with domestic realities,” said Matthew Graves, who helps manage $442 billion at California-based Western Asset.