The attention of the financial and business community is directed to the meeting of the Monetary Policy Committee of the Central Bank of Egypt, to discuss interest rates on deposits and lending, which are scheduled to be held next Thursday.
This comes after the US Federal Reserve raised interest rates by 0.75%, the highest movement since 1994, for the third time during 2022, with the aim of combating high inflation rates.
The Monetary Policy Committee of the Central Bank of Egypt has raised interest rates by 3% since the beginning of the year, as the bank raised them by 1% at an extraordinary meeting on March 21, and then by 2% last May 19, after reaches 11.25% for deposits and 12.25% for lending.
“Amwal Al-Ghad” monitored the expectations of a group of bankers and macroeconomic analysts about the central bank’s expected directions at the next meeting of its monetary policy committee on interest rates, and whether it would prove or tend to do so. increase. .
Majed Fahmy: 1% expected increase
Maged Fahmy, a banking expert and former head of the Industrial Development Bank, expected the Central Bank of Egypt to raise the interest rate by 100 basis points (1%), which is affected by the US Federal Reserve’s decision to shift its interest rates. with 75 basis points.
At the same time, Fahmy believed that the Central Bank of Egypt did not need much to raise the interest rate, due to the fact that banks provide certificates with a large yield of more than 14%, which is the value close to current inflation. rate, and therefore it is not necessary to raise interest rates at the next meeting, as This causes the price of credit to rise, which will have adverse effects on inflation.
Fahmy pointed out that countries such as China and Russia have taken refuge in lowering interest rates, so there is no need to raise them in Egypt at high rates, especially as the rise in interest rates on loan production and growth is having a negative impact, as well as the stock market and the flight of funds from the money market to high-yield bank certificates.
Macroeconomic Analyst: The move is possible to maintain the attractiveness of investing in domestic debt instruments
In turn, Amani Bandari, a macroeconomic analyst, said the Federal Reserve’s decision to raise interest rates would drive emerging markets accordingly to a new rate hike.
She pointed out that the decision will have repercussions on debtor countries and emerging markets as it puts more pressure on countries with large debts.
She expected the Central Bank to raise interest rates by between 50 and 100 basis points at the forthcoming meeting of the Monetary Policy Committee to maintain the attractiveness of investing in domestic debt instruments, which was severely affected by the outbreak of the Corona virus and its aftermath. of the Russian war on Ukraine.
Bandari added that the central bank is currently trying to reach a difficult equation represented in the presence of a real return for customers on their savings to absorb liquidity and fight inflation, while at the same time having the negative effect of rising interest rates avoid and the rate of growth, indicating that the effect of moving interest rates on inflation will take time to reverse.
Prime Research expects an increase similar to the Federal Reserve and the Gulf Cooperation Council countries
Goth Prime Securities expected the Central Bank of Egypt to raise interest rates by 100 basis points next week, especially as the recent treasury bid was only partially fulfilled due to the provision of much higher-than-expected returns.
She pointed out that it was similar to the central banks in the Gulf Cooperation Council countries that followed in the footsteps of the Federal Reserve to defend their coin pens, adding: “In Egypt, our initial view was two increases of 100 basis points, one in August and the other in November 2022.
“Given the higher than expected interest rate hike by the Federal Reserve, and as the next CBE meeting will only be in two months, we now believe that the CBE can find it reasonable to prevent inflation from getting out of control. In Egypt by The rate hike earlier than planned for the rest of the year, ”says Prime.
“Beltone” expects the “Central” to set interest rates
On the other hand, the research sector of Beltone Financial expected the Central Bank of Egypt to keep interest rates unchanged at the next meeting of the Monetary Policy Committee, which will be held on 23 June 2022.
In a research note, Beltone indicated that general annual inflation in Egypt rose to 13.5% in May, compared to 13.1% in April, which declined from its 15% expectations as the annual inflation reading slowed in monthly inflation, which has risen. by 1.1% compared to 3.3% in April.
The monthly inflation reading reflected a slight increase in the prices of food commodities by 0.6% compared to 7.6% in April, mainly supported by a 15% decrease in vegetable prices compared to an increase of 29.5%, according to Beltone.
At the annual reading level, Beltone Investment Bank expects general inflation to continue to rise with the impact of the rise in commodity prices worldwide on the domestic market.
Beltone believes that the impact of rising interest rates on inflation will take time to fully reflect, and we expect the Central Bank of Egypt to keep interest rates unchanged at the next meeting to control inflation rates in the face of global instability during the current period. The increase in treasury yields and the 91-day yield that averages 15% during this week’s auction support our view. ”