Today, Thursday, November 21, 2024, the Monetary Policy Committee of the Central Bank of Egypt will decide the base interest rate for the penultimate time in 2024, amid expectations that the main interest rates will remain stable.
At the meeting of last October 17, the Monetary Policy Committee of the Central Bank of Egypt decided to keep the overnight deposit and lending rates and the Central Bank’s main operation rate at 27.25%, 28.25% and 27.75%, respectively. It also decided to keep the credit and discount rates at 27.75%.
Experts unanimously agreed that the Monetary Policy Committee of the Central Bank of Egypt will not reduce interest rates at its meeting today, Thursday.
“We expect the Monetary Policy Committee to leave interest rates unchanged at its next meeting on November 21,” investment bank HC Securities said in a note.
“The third consecutive rise in Egypt’s headline inflation rate has dashed hopes that the central bank will cut interest rates before the end of this year,” UK-based research firm Capital Economics said in a note.
The annual inflation rate in Egypt recorded 26.5% on an annual basis in October, compared to 26.4% in September, according to the Central Agency for Public Mobilization and Statistics.
Experts confirmed that the Central Bank of Egypt will begin reducing interest rates when inflation is under control, knowing that the Central Bank of Egypt sets an inflation target of between 5% and 9%.
Perhaps there are some other reasons that the Central Bank of Egypt puts before it that make it more likely that interest will be fixed, which are:
• Fighting dollarization
• Providing income to the household sector in the form of certificates of deposit and absorbing liquidity from the market to reduce inflation
• Reducing interest rates depends on slowing the pace of inflation
• Foreign exchange flows that show strong momentum from remittances and tourism, which compensates for the decline in Suez Canal revenues due to geopolitical tensions and the trade deficit due to the rise in oil imports.
• Keeping interest rates high maintains the spread in interest rates for interest trading.
