(Bloomberg) -- Egypt raised interest rates for the second time since March, seeking to tackle soaring inflation and restore the allure of its local debt with foreign investors amid a global wave of monetary tightening.

The central bank increased the deposit and lending rates by 200 basis points each to 11.25% and 12.25% respectively, the Monetary Policy Committee said Thursday in a statement. While all but one of nine economists surveyed by Bloomberg predicted a hike, they were split on the size, with a slight majority expecting the deposit rate to rise to 10.25%.

Consumer-price growth in the North African nation hit its highest level in almost three years in April as food costs spiked due to the war in Ukraine. The figure also reflected a devaluation of the Egyptian pound by more than 15% on March 21, the same day authorities hiked interest rates for the first time since 2017, by 100 basis points.

A major food importer, Egypt is racing to deal with record grain prices fueled by the conflict. The most populous Arab nation previously bought most of its wheat from Ukraine and Russia. The latter has also been a major source of visitors for its key tourism industry.

Thursday’s decision also shows an effort to partly reverse the decline in Egypt’s inflation-adjusted interest rate at a time when global central banks led by the US Federal Reserve move to combat surging prices with higher borrowing costs. 

A high differential had spurred a wave of foreign investment in the local debt market in recent years. But after annual inflation climbed to 13.1% in April, both Egyptian policy rates turned negative -- when adjusted for prices -- for the first time since 2018. The government says there’s been $20 billion in outflows this year.

Egypt’s central bank “clearly has to raise rates in light of the rising inflation expectations and Fed tightening,” Mohamed Abu Basha, head of macroeconomic research at investment bank EFG Hermes, said before the decision. 

Authorities were also likely weighing the impact of a significant hike on the debt burden of what’s already one of the Middle East’s most indebted countries. That could further strain finances without necessarily winning back foreign capital during a period when “global markets are ripe with uncertainty,” Abu Basha said.

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