The Central Bank of Egypt said in a statement today, Thursday, that it kept the main interest rates unchanged.
The bank added that it kept the overnight lending rate at 17.25%, and the overnight deposit rate at 16.25%.
The Monetary Policy Committee of the Central Bank of Egypt held its first meeting during the current year 2023, today, Thursday, amid expectations that indicated continued tightening of monetary policy and raising interest rates between 1% and 2%, especially since the inflation rate is stable at the highest level in more than 4 years. .
Yesterday, Wednesday, the US Federal Reserve decided to raise interest rates by 25 basis points, to reach the target range of 4.5-4.75%. The US central bank had led the markets to expect a relatively smaller increase as it shifted to a more moderate pace of the monetary tightening cycle amid signs of slowing inflation and growth.
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The Fed raised interest rates 4 consecutive times by 75 basis points each, followed by an increase of 50 basis points last year, in an attempt to curb the record rise in inflation.
In a recent research note, the research department of HC Securities and Investment suggested that the Monetary Policy Committee of the Central Bank of Egypt would keep interest rates unchanged. The company’s banking and macroeconomics analyst, Heba Mounir, said that the decision to keep it will be within the framework of allowing the market to absorb the interest rate hike by about 300 basis points during the last meeting of the Monetary Policy Committee.
HC predicted that inflation would accelerate to 23.5% in July 2023, before declining to 18.2% in December 2023, with an average of 21.5% in 2023. It expected that the average yield of treasury bills for one year would be about 20.6% in 2023 ( with a tax rate of 15% for US and European investors), taking into account expectations of a rate hike of 200 basis points during the rest of the year.
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On the other hand, a recent poll conducted by “Archyde.com” agency suggested that the Central Bank of Egypt would raise overnight interest rates by 150 basis points during the Monetary Policy Committee meeting. The average forecast in a poll of 13 analysts was that the bank would raise the interest rate on deposits to 17.75% and the lending rate to 18.75% during the Monetary Policy Committee’s periodic meeting.
In a research note, the economist at the National Bank of Kuwait, Noman Khaled, suggested that the Central Bank of Egypt would raise interest rates by at least 100 basis points, indicating that it is important for the central bank to move before the inflation data is released next week, expecting that the new rate will be For inflation at levels ranging between 23% and 24%.
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The Monetary Policy Committee of the Central Bank of Egypt decided, during its last meeting in 2022, to raise the interest rate on deposits and overnight lending by 300 basis points, to 16.25% and 17.25%, respectively.
This decision accelerated monetary tightening by 500 basis points in the fourth quarter of 2022, as the Central Bank of Egypt raised interest rates by 800 basis points during 2022. At the same time, inflation rose to 21.3% in December 2022.