3:21 pm
Thursday 15 December 2022
I wrote – Manal Al-Masry:
The Central Bank of Egypt intends to hold the last regular meeting of the Monetary Policy Committee during 2022 next Thursday, corresponding to December 22, to discuss the fate of the interest rate on deposits and loans, according to the meeting schedule published on the its website.
The Central Bank has held 7 meetings of the Monetary Policy Committee during the current year, in addition to the following meeting, including two extraordinary meetings in which the interest rate was raised, one on 21 March and the second on 27 October.
Usually the central bank cancels, after each extraordinary meeting, the periodic monetary policy meeting that follows it, which is that of 27 March and that of 3 November, due to the short period that separates them.
The Central Bank raised the interest rate by 5% in 3 out of 7 meetings during the current year, and the first decision to raise the interest rate by 1% came last March in an extraordinary meeting with the Egypt starting negotiations with the International Monetary Fund, and was followed by a second hike of 2% last May, then came back and raised the interest rate by 2% in an extraordinary meeting on October 27th.
The interest rate at the Central Bank (Coridor) has risen in the current year, after the increases, to 13.25% on deposits and 14.25% on loans.
While it has decided to fix the interest in its periodic interest meetings in February, June, August and last September.
The extraordinary meetings coincide with the decision to devalue the pound, which is one of the recommendations of the IMF, usually asking 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 – which should be approved at tomorrow’s meeting on Friday – provides for Egypt to obtain a package of financing worth 9 billion dollars, of which 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 Funding shortage and budget deficit.
4 bankers, with whom Masrawy spoke earlier, expected the central bank to raise the interest rate by 2% on deposits and loans 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 that date.
According to the bankers, the Central Bank needs to raise the interest rate with the aim of attracting indirect foreign investment in Egyptian debt instruments, which is crucial for its contribution to strengthening exchange rate stability as well as the existence of a real yield on the savings of bank customers to protect them from erosion due to the high rate of inflation, i.e. (the pace of price increases) according to the prescription of the International Monetary Fund.
