2023-08-03 09:05:00
Egyptian Central Bank
Egyptian Central
Fixed price forecasts
Cairo – Khaled Hosni
Posted on: August 03, 2023: 01:05 PM GST Last updated: August 03, 2023: 01:14 PM GST
Today, the Monetary Policy Committee of the Central Bank of Egypt will hold a meeting to review interest rates. And the expectations of a large segment of analysts and research and study companies indicate that the monetary policy committee of the central bank will fix interest rates.
At the moment, the overnight deposit and lending rate is currently 18.25% and 19.25% respectively. While the rate of credit and discount and the main operation of the central bank is 18.75%. The Central Bank of Egypt raised interest rates by a total of 1,000 basis points since March 2022, but kept them unchanged in the May and June meetings of this year.
The Research Department of the “HC” Securities and Investment Company had suggested that the Monetary Policy Committee of the Central Bank of Egypt would keep the current interest rates unchanged at its meeting scheduled to be held this evening.
She pointed out that inflation escalated for the second month in a row, recording 35.7% on an annual basis in June, up from 32.8% in May on an annual basis, as monthly prices increased by 2.08% on a monthly basis in June, compared to 2.72% in the previous month.
In terms of the global economy, the US Federal Reserve raised the interest rate by 25 basis points last Wednesday, to reach the range of 5.25-5.50%, i.e. a total increase of 100 basis points since the beginning of the year to date, and 425 basis points in 2022.
HC macroeconomic analyst, Heba Mounir, suggested that inflation in Egypt would continue to rise by 2.0% on a monthly basis, to record 36.6% on an annual basis for the month of July 2023, in conjunction with a shortage of some commodities and inputs as a result of tightening import operations and poor availability of hard currency. .
She pointed out that the import control, in conjunction with the improvement in tourism revenues, prompted a surplus in the net balance of payments in Egypt during the first and second quarters of the fiscal year 2022/2023, amounting to $523 million and $75.6 million, respectively, but it turned into a deficit of $1. $317 million in the third quarter of the same year due to a decline in exports by regarding 17% on a quarterly basis, affected by the drop in the prices of natural gas and petroleum products, as well as the decrease in the net surplus of the services balance by 46% compared to the previous quarter.
Dr. Ashraf Ghorab, Vice President of the Arab Union for Social Development in the Arab Action System of the League of Arab States for Economic Development Affairs, expected that the Monetary Policy Committee of the Central Bank, in its meeting today, would tend to fix interest rates on deposits and lending, despite the high rate of primary inflation, and despite the reserve decision. The US Federal Reserve raised the interest rate at the end of July by regarding 25 basis points, bringing the interest rate to 5.5%, despite the recent slowdown in US inflation.
He made it clear that raising the interest rate is not the only tool to confront inflation, and that raising it during the past periods was not feasible to reduce inflation rates sufficiently because inflation is not linked to the abundance of liquidity among citizens, but rather to external factors that caused a rise in the exchange rate of the dollar once morest the pound, in addition to the high cost of Import, high global energy, shipping and transport prices and slowing down supply chains, in addition to the rise in grain prices following the Russian-Ukrainian crisis.
He pointed out that raising the interest rate causes an increase in the deficit in the state’s general budget, which leads to an increase in the cost for those wishing to invest and expand their existing projects, and this leads to an economic slowdown, in addition to that raising the interest increases financing costs for producers and traders, which causes prices to rise.
He said that the savings certificates offered by banks during the last period, in addition to the dollar savings certificate, these certificates withdrew the liquidity from the markets that citizens possess in their homes and became in the banks, and for these reasons, fixing the interest rate may be the closest decision to the committee.
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