03:21 PM
Thursday, December 15, 2022
I wrote – Manal Al-Masry:
The Central Bank of Egypt intends to hold the last periodic meeting of the Monetary Policy Committee during 2022 next Thursday, corresponding to December 22, to discuss the fate of the deposit and lending interest rate, according to the meeting schedule published on its website.
The Central Bank had held 7 meetings of the Monetary Policy Committee during the current year, in addition to the next meeting, including two exceptional meetings in which the interest rate was raised, one of them on March 21 and the second on October 27.
Usually, the central bank cancels, after each extraordinary meeting, the periodic monetary policy meeting that follows it, which is the meeting of March 27 and November 3, due to the close time period between them.
The Central Bank raised the interest rate by 5% in 3 meetings out of 7 during the current year, and the first decision to raise the interest rate by 1% came last March in an extraordinary meeting with Egypt starting negotiations with the International Monetary Fund, and it was followed by a second hike of 2% last May. Then he returned and raised the interest rate by 2% in an extraordinary meeting on October 27.
The interest rate at the Central Bank (Coridor) rose during the current year, after the increases, to 13.25% on deposits and 14.25% on lending.
While he decided to fix the interest in its periodic meetings of the interest in February, June, August and last September.
The extraordinary meetings coincide with a decision to devalue the pound, which is one of the recommendations of the Monetary Fund, which usually calls for the Central Bank to abandon support for the pound and the existence of a real return on customer savings.
The agreement with the Monetary Fund – expected to be approved at its meeting tomorrow, Friday – includes Egypt obtaining a package of financing worth $9 billion, including $3 billion directly from the International Monetary Fund, $1 billion from its Sustainability Fund, and $5 billion from international and regional partners, with the aim of bridging the crisis. Financing gap and budget deficit.
4 bankers, whom Masrawy spoke to earlier, expected that the Central Bank would raise the interest rate by 2% on deposits and lending and issue a certificate with a high interest rate of 20%, at its regular meeting on Thursday, next December 22, or an extraordinary meeting before this date.
According to bankers, the Central Bank needs to raise the interest rate with the aim of attracting indirect foreign investments in Egyptian debt instruments, which is crucial for its contribution to strengthening the stability of the exchange rate, as well as the existence of a real return on customers’ savings in banks to protect them from erosion due to the high rate of inflation, i.e. (The pace of raising prices) in accordance with the International Monetary Fund’s prescription.