CAIRO (AP) — Egypt’s Central Bank raised its key interest rate Monday for the first time since 2017, citing inflationary pressures triggered by the coronavirus pandemic and Russia’s war in Ukraine, which hiked oil prices to record highs.

The move saw the Egyptian pound slip, trading at over 18 to the dollar by midday — up from an average of 15.6 pounds for $1. That was likely to take a heavy toll on poor and middle-class Egyptians. They have suffered from price hikes since the government embarked on an ambitious reform program in 2016 to overhaul the country’s battered economy.

The war in Ukraine has shaken the global economy and threatened food supplies and livelihoods of people across the world. Brent crude, the price basis for international oil trading, spiked over $112 per barrel on Monday after nearly hitting a peak of $140 earlier this month.

The Central Bank of Egypt increased the key interest rate by 100 basis points to reach 9.75%. The overnight deposit and lending rate were also raised by 100 basis points each to reach 9.25% and 10.25% respectively, the bank said.

The increases followed an unscheduled meeting of the bank’s monetary policy committee, which had been set to meet on Thursday.

James Swanston, an economist with the Capital Economics research firm, said the increases in interest rates and a devaluation of the Egyptian pound “could be precursors” to securing a new financing package from the International Monetary Fund, which Cairo is reportedly seeking.

“Fresh financial assistance from the IMF would certainly help to reassure investors over Egypt’s commitment to orthodox macroeconomic policymaking,” he said.

Russia and Ukraine combine for nearly a third of the world’s wheat and barley exports. Ukraine is also is a major supplier of corn and the global leader in sunflower oil, used in food processing. The two countries are also a major source of visitors to Egypt, where tourism is a main source of foreign currency.

Credit rating agency Fitch said last week that the war in Ukraine would add to Egypt’s economic strains, including “reduced tourism inflows, higher food prices and greater financing challenges.”

Egypt is the world’s largest importer of wheat, mainly from Russia and Ukraine.

Meanwhile, Egypt’s annual inflation rate increased to 10% in February from 8% the previous month, according to the state-run statistics bureau.

Private bakeries have hiked the price of wheat-produced bread, a lifeline for most Egyptians, by up to 50%. A single loaf of bread costs 1.5 Egyptian pounds (9.5 cents), up from 1 pound (6.3 cents). State-run bakeries still sell 20 pieces of subsidized bread for 1 Egyptian pound.

The government, in an effort to prevent runaway prices of unsubsidized bread, announced Monday fixed prices for the next three months. Prime Minister Mustafa Madbouly set the price of a 45-gram flat bread at 0.5 pounds and a 65-gram loaf at 0.75 pounds.

The government said retailers that violate the pricing system could face a fine of up to 5 million pounds ($286,200).

A 13% increase in pensions and salaries for civil servants will be applied starting in April, Madbouly said in a news conference. The increases were announced in January and had been scheduled to take effect in July.

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