Recent months have witnessed a great deal of turmoil in the economies of developed and emerging countries as a result of the Russian-Ukrainian crisis and the rise in inflation rates to unprecedented levels, as well as the supply chain crisis and the ongoing repercussions of the Corona pandemic in some countries, which urged the US Federal Reserve 40 years ago to raise interest rates to offset higher rates of higher inflation.
The rise in US interest rates in emerging markets was significantly reflected, leading to the flight of hot money from emerging markets, prompting central banks around the world to tighten monetary policy to counter high inflation on the one hand and to foreign investment in debt preserving instruments on the other hand.
Amwal Al-Ghad magazine examined the views of a group of investment bank leaders and analysts to monitor their vision of the central bank’s expected steps for interest rates to confront high inflation rates, and the most prominent steps expected by the government will be taken during the coming period, in addition to the key axes that must be relied on to stem this inflationary wave.
Mohamed Maher: The Central Bank’s proactive steps have broken the severity of high inflation
Mohamed Maher, CEO of Prime Holding for Financial Investments, said in this regard that the inflation facing the Egyptian market is obtained from foreign markets due to the state of turmoil in the movement of trade and industry and the rise in prices of basic commodities, so that the economies of emerging markets and developing economies are affected, so that inflation reaches its highest rates.Since 2011, it has today exceeded target levels in more than half of these economies that have a framework to set inflation targets , which has largely influenced the domestic market as an emerging market dependent on imports of some raw materials and products from abroad.
He explained that the scenarios of declining inflation in the Egyptian market are closely linked to the calm of the world situation, pointing out that the state should aim to increase major national projects in order to supply consumer goods and products to head the global inflation movement. to offer. during the coming periods.
The CEO of Prime Holding Company for Financial Investments stated that the proactive steps taken by the Central Bank to correct the exchange rate and raise interest rates on the pound have curbed the rise in inflation, with the expectation of interest rates again. increase during tomorrow’s meeting.
It is noteworthy that the annual core inflation rate rose to 11.9% in April 2022, compared to 10.1% last March, and the annual general inflation rate reached 13.1 percent last April, compared to 10.5% in March 2022 .
Wael Ziadeh: Reducing import movement and reducing spending on food commodities is a necessity
Wael Ziada, founder and CEO of Zila Capital, said the economic turmoil that has erupted since the outbreak of the Russian-Ukrainian crisis has led to an increase in inflation rates over the past few months, prompting countries to take proactive steps to take to confront it. especially the US Federal Reserve’s decision to raise interest rates higher A rate 20 years ago, in addition to the Central Bank’s decisions at the local level, which raised interest rates by 1% to counter inflation in the markets.
He added that these repercussions had a major impact on the Egyptian capital market, as it is among the emerging markets, and limited its ability to attract more investment under these circumstances, prompting the Central Bank to raise interest rates to warm money. preserve and reduce his departure. of emerging markets.
He said the handling of inflation in the Egyptian market should reduce the movement of imports and especially spending on food commodities, which has seen a significant increase over the past three months due to the increase in demand for it, in addition to the high demand for fuel and energy in various global markets.
Ziadeh predicted that inflation would rise to a level of 16 to 17% by the end of this year and early next year, with the expectation that the government could reduce the potential negative impact through low-cost financing for vital projects, small and micro projects .
He pointed out that a large segment of investors, especially foreigners, had begun to leave emerging markets and were on their way to safe investment in fixed-income instruments, which is normal to reduce risk at the moment, noting that one of the reasons that prompted the Central Bank to move in the direction of raising interest rates to liberalize The exchange rate of the pound and the ability to maintain that hot money in light of the uncertainty facing the economy , according to Wael Ziada.
He expected the Central Bank to continue raising interest rates again, in the light of the indicators and statistics showing the extent of the risks to which the inflation market is exposed, and explains that the Central Bank is the one that clear and correct vision to increase or decrease interest rates at the required rate appropriate for statistics and data.
Mohamed Hassan: Opening new markets to support exporters is “inevitable” … and raising interest rates by 2% by the end of the year
In the same context, Mohamed Hassan, Managing Director of Bloom Egypt Asset Management, confirmed that since the effects of the Corona crisis, the world economy has faced a state of stagnation in the world trade movement and has accordingly affected inflation. .
He pointed out that the increase in the annual inflation rate in Egypt during the month of April came to 14.9% due to the repercussions of this crisis around the money market.
He pointed to the need for the state to support and encourage exporters and increase the volume of Egyptian exports while opening up new markets, in order to reduce the intensity of the inflationary wave due to Egypt’s dependence on imports from abroad, as the import bill 70 billion. dollars, and therefore the citizen must reduce the spending process.
The managing director of Bloom Egypt Asset Management expected that interest rates would rise by 1-2% throughout the year, especially after the rise in the inflation rate, and that the Central Bank would resort to price fixing in early 2023.
Al-Ahly Pharos expects inflation to reach 15% in August and to decline gradually in April 2023
Radwa Al-Swaify, head of the research sector at Al-Ahly Pharos Company, expected inflation to peak, representing 14-15% in August 2022, noting that this wave will begin to recede and return to the target range by April 2023
She indicated that the Central Bank raised interest rates again by 200 basis points on 19 May, to curb inflationary trends, and to take into account the trends of interest rates within emerging markets, in view of the monetary tightening trends worldwide.