The Monetary Policy Committee was scheduled to meet on March 24, before anticipating expectations with its extraordinary meeting.
The Monetary Policy Committee of the Central Bank of Egypt explained its decision as a result "Rising international commodity prices The result of more disruptions in the supply chain as well as an increased sense of risk aversion has increased domestic inflationary pressures as well as external imbalances.".
She explained that in order to maintain the macroeconomic stability that has been achieved, the Central Bank stresses the importance of the exchange rate flexibility to serve as a shock absorber to maintain Egypt’s competitiveness.
Pros and Cons
In turn, the Chairman of the Planning and Budget Committee in the Egyptian House of Representatives, Fakhry El-Feky, described the decision to raise the interest rate as important, and for this reason it came in an exceptional session, and the Central Bank did not wait for the regular session at the end of the week, because this decision coincides with the trend of global central banks to take a strict monetary policy by raising Interest rates in light of the accelerating inflation wave due to the situation of the global economy, and the reversal in supply chains, and the Ukrainian crisis came to lead to further acceleration as a result of a slowdown in the supply of grain and an increase in energy prices in general.
Maximum alphabetical expectation "Sky News Arabia"that the Central Bank of Egypt took a proactive decision to raise the interest rate by one percent, while expectations were to raise it by half a percent, and this is very appropriate in curbing inflation, because in this case, inflation has an imported part as a result of the global inflation wave, and another part is due to liquidity in the body of the local economy. Compared to what is offered.
Regarding the advantages of the decision, the head of the Egyptian Parliament’s Plan and Budget Committee indicates that the central bank can, with this decision, dry up a measure of excess liquidity and reduce inflation rates, instead of accelerating it and its effects on the citizen as well as on the state’s general budget.
hot money
Al-Fiqi pointed out that the second matter of raising the interest rate is that it is reflected in the government’s position on borrowing, because it will borrow at higher rates and this may reduce the flow of hot money abroad.
He said that in the recent period some hot money that had a balance of foreign exchange deposited with Egyptian banks came out, and I got the return in Egyptian pounds to buy treasury bills and bonds, which benefit from high interest rates, and of course the presence of these hot money helps in stabilizing the exchange rate along with other factors many others.
He pointed out that raising the interest rate will be reflected in the government’s automatic raising of the interest rate on treasury bills, which leads to stopping the flow of hot money abroad, estimated at regarding 26 billion dollars in Egyptian banks, and this helps to stabilize the value of the Egyptian pound.
Despite the sudden decision of the Central Bank of Egypt to move interest rates, the pound fell significantly once morest the US dollar.
And the Egyptian pound fell 10.67 percent, on Monday morning, to trade at 17.42-17.52 once morest the US dollar.
El-Feki said that the decision gives a positive signal to credit rating agencies and international financial institutions, that Egypt keeps pace with and adapts to what is happening in the world with decisions in the right direction, and this preserves Egypt’s credit rating.
negative repercussions
On the other hand, the head of the Parliament’s Plan and Budget Committee clarifies the negative signs from the decision. When the interest rate rises, this affects the interest of the public debt, especially since Egypt borrows from the inside with the guarantee of treasury bills, which affects the overall deficit and the primary surplus in the state’s public budget.
The decision also pushes the business sector, whether governmental or private, to borrow with a higher interest, and this has a negative impact on its ability to expand its business activity, according to El-Feki.
و :ضاف: "In general, this decision outweighs its positives, the negative repercussions it leaves behind, and it was important to implement it".
Regarding the discussion of the decision in the Egyptian parliament, El-Fiqi indicated that the committee is expected to discuss the new budget early next April, according to the text of the Egyptian constitution.
و :ضاف: "It is expected that the decision will have an impact on that budget, as the interests of the public debt will rise, but the Ministry of Finance will take this into account in this new budget.".
Advantage for the citizen
For his part, the head of the Egyptian Forum for Economic Studies, Rashad Abdo, said in statements to the website "Sky News Arabia"The decision was expected as a result of the large inflationary wave sweeping the world, as a result of the repercussions of the war between Russia and Ukrainerising wheat and energy prices.
Abdo indicated that the decision benefits the citizen in enjoying his savings, and that there will be a high interest rate or special certificates offered by Egyptian banks.
Against the background of the decision, Al-Ahly Bank and Egypt decided to offer a new one-year savings certificate at an annual interest rate of regarding 18 percent.
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and select Egyptian Central Bank The overnight lending rate is 10.25 percent, and the overnight deposit rate is 9.25 percent.
The Monetary Policy Committee was scheduled to meet on March 24, before anticipating expectations with its extraordinary meeting.
The Monetary Policy Committee of the Central Bank of Egypt explained its decision as a result ofRising international commodity prices The result of more disruptions in the supply chain as well as increased risk aversion has increased domestic inflationary pressures as well as external imbalances.”
She explained that in order to maintain the macroeconomic stability that has been achieved, the Central Bank stresses the importance of the exchange rate flexibility to serve as a shock absorber to maintain Egypt’s competitiveness.
Pros and Cons
In turn, the Chairman of the Planning and Budget Committee in the Egyptian House of Representatives, Fakhry El-Feky, described the decision to raise the interest rate as important, and for this reason it came in an exceptional session, and the Central Bank did not wait for the regular session at the end of the week, because this decision coincides with the trend of global central banks to take a strict monetary policy by raising Interest rates in light of the accelerating inflation wave due to the situation of the global economy, and the reversal in supply chains, and the Ukrainian crisis came to lead to further acceleration as a result of a slowdown in the supply of grain and an increase in energy prices in general.
El-Feki explained to “Sky News Arabia”, that the Central Bank of Egypt took a proactive decision to raise interest rates by one percent, while expectations were to raise it by half a percent, and this is very appropriate in curbing inflation, because in this case, inflation has an imported part as a result of the global inflation wave, and a part Another is due to the liquidity in the body of the local economy compared to the supply of goods.
Regarding the advantages of the decision, the head of the Egyptian Parliament’s Plan and Budget Committee indicates that the central bank can, with this decision, dry up a measure of excess liquidity and reduce inflation rates, instead of accelerating it and its effects on the citizen as well as on the state’s general budget.
hot money
Al-Fiqi pointed out that the second matter of raising the interest rate is that it is reflected in the government’s position on borrowing, because it will borrow at higher rates and this may reduce the flow of hot money abroad.
He said that in the recent period some hot money that had a balance of foreign exchange deposited with Egyptian banks came out, and I got the return in Egyptian pounds to buy treasury bills and bonds, which benefit from high interest rates, and of course the presence of these hot money helps in stabilizing the exchange rate along with other factors many others.
He pointed out that raising the interest rate will be reflected in the government’s automatic raising of the interest rate on treasury bills, which leads to stopping the flow of hot money abroad, estimated at regarding 26 billion dollars in Egyptian banks, and this helps to stabilize the value of the Egyptian pound.
Despite the sudden decision of the Central Bank of Egypt to move interest rates, the pound fell significantly once morest the US dollar.
And the Egyptian pound fell 10.67 percent, on Monday morning, to trade at 17.42-17.52 once morest the US dollar.
El-Feki said that the decision gives a positive signal to credit rating agencies and international financial institutions, that Egypt keeps pace with and adapts to what is happening in the world with decisions in the right direction, and this preserves Egypt’s credit rating.
negative repercussions
On the other hand, the head of the Parliament’s Plan and Budget Committee clarifies the negative signs from the decision. When the interest rate rises, this affects the interest of the public debt, especially since Egypt borrows from the inside with the guarantee of treasury bills, which affects the overall deficit and the primary surplus in the state’s public budget.
The decision also pushes the business sector, whether governmental or private, to borrow with a higher interest, and this has a negative impact on its ability to expand its business activity, according to El-Feki.
He added: “In general, this decision outweighs its positives and negative repercussions, and it was important to implement it.”
Regarding the discussion of the decision in the Egyptian parliament, El-Fiqi indicated that the committee is expected to discuss the new budget early next April, according to the text of the Egyptian constitution.
He added, “It is expected that the decision will have an impact on that budget, as the interests of the public debt will rise, but the Ministry of Finance will take this into account in that new budget.”
Advantage for the citizen
For his part, the head of the Egyptian Forum for Economic Studies, Rashad Abdo, told Sky News Arabia that the decision was expected as a result of the large inflationary wave sweeping the world, as a result of the repercussions of the war between Russia and Ukrainerising wheat and energy prices.
Abdo indicated that the decision benefits the citizen in enjoying his savings, and that there will be a high interest rate or special certificates offered by Egyptian banks.
Against the background of the decision, Al-Ahly Bank and Egypt decided to offer a new one-year savings certificate at an annual interest rate of regarding 18 percent.
