Monetary Policy Committee decided central bankMaintaining the overnight deposit and lending rates and the central bank’s main operation rate at 11.25%, 12.25% and 11.75%, respectively, and the credit and discount rate at 11.75%, and investment banks identified the three most important reasons behind Install interestWhich:
1- Despite the fact that the annual inflation rate for the total of the Republic recorded 15.3% last August, and food and beverages recorded an annual inflation of 24.3% in August 2022, on a monthly basis, the inflation rate for the total of the Republic increased by 0.5% in August 2022 compared to In July 2022, food and beverages recorded zero inflation in August 2022 compared to July 2022.
This rise in inflation rates was due to 3 factors, namely the rise in international prices of food commodities, especially those imported by Egypt such as wheat and edible oils, the rise in global prices of raw materials, especially energy, an increase in the money supply or monetary liquidity, and the first and second factors outside the scope of monetary policy The central bank, where workers return to global causes that affected the world as a whole such as disruption of supply chains, prospective geopolitical risks such as the war between Russia and Ukraine, changing climates, lower productivity growth, and demographic changes.
2- The new administration of the Central Bank of Egypt will adopt a monetary policy in line with the new trends in the global economy, and aims to attract foreign currencies from a wide range of sources, and stimulate the investment climate in Egypt, in addition to a broad consensus among the country’s financial and monetary officials, which is Commitment to a free flexible exchange rate.
3- A limited impact on the stock portfolio, as the foreign investor is still conservative with regard to entering emerging markets in general, and the exchange rate in Egypt occupies the largest part of the investment decision. Raising the interest rate will not attract foreign investors to buy the Egyptian pound and will not support the monetary reserve; Because the yield of dollar bonds with different maturities is currently at 15%, which will represent an obstacle to investing in treasury bonds in the Egyptian pound with a return close to 12%.