The Monetary Policy Committee of the Central Bank of Egypt is preparing to hold its second meeting during the current year 2023 next “Thursday”, among 8 meetings annually, to discuss the fate of the interest rate on deposits and lending, and to discuss curbing high inflation, as the first meeting of the Central Bank of Egypt was on the first of Last February, the meeting at which it was agreed to fix the interest rate.
In recent years, the meetings of the Monetary Policy Committee in Egypt have gained great interest from those working in the capital market, as well as a large percentage of citizens. Because it is linked to an increase in prices, while Egyptian economists expect many scenarios, and some are optimistic that the pound will stabilize at its current level without devaluation, while the most pessimistic expectations were that the dollar would reach 40 pounds.
A report issued by HSBC, one of the largest international banks, expected that the Central Bank of Egypt would raise the interest rate by 3%, explaining that the position of the monetary policy of the Central Bank of Egypt, in keeping the interest rate unchanged at its first meeting during the month of February, represented pressure on the interest rate. The exchange of the pound against the dollar, indicating that the real return – investment in the pound – is still negative at 15% against inflation; Therefore, the Central Bank needs to follow a very tight monetary policy.
The annual core inflation rate in Egypt jumped to 40.3% during last February, compared to 31.2% last January. foreign currency in banks.
For his part, the expert in economic affairs in Cairo, Abu Bakr El-Deeb, expected the interest rates to be raised by the Monetary Policy Committee of the Central Bank, between 2 and 3%; With the aim of curbing inflation and controlling the price increase, after fixing the interest rate at its last meeting, especially after the rate of inflation recorded about 40.3%, during the month of February, according to the latest data of the Central Bank.
Al-Deeb explained to “Okaz” that raising the interest rate is one of the tools by which the Central Bank tames inflation and promotes investment in the Egyptian pound, pointing out that the Central Bank of Egypt decided to raise interest 8% last year 2022, on 4 times, the last of which was 3% last December. Finally, the US Federal Reserve decided, in its second meeting, to raise interest rates for the ninth time in a row by 0.25%, which is a lower rate of increase than expected, due to the wave of bankruptcies of US banks.
The economist, Dr. Alaa Rizk, believes that the upcoming meeting of the Central Bank of Egypt represents a circle of real interest for all those who follow the economic affairs, stressing that raising the interest rate may be an attempt to attract funds and short-term investments, which fled, finally, as a result of the high interest rates approved by the Federal Reserve. the US during the past periods, expecting that the central bank would take an unexpected decision to fix the interest rate; To maintain the budget deficit and debt service.
Mohamed Hefny (Cairo)