The monetary policy committee decides Central bankBy keeping sight deposit and loan rates and the central bank principal operating rate at 11.25%, 12.25% and 11.75%, respectively, and the credit and discount rate at 11.75%, investment banks have identified the three most important underlying reasons Install interestWhich:-
1- Although the annual inflation rate for the total of the Republic registered 15.3% last August and food and beverages registered an annual inflation of 24.3% in August 2022, on a monthly basis, the inflation for the total of the Republic of the Republic increased by 0.5% in August 2022 compared to July 2022, food and drinks recorded zero inflation in August 2022 compared to July 2022.
This increase in inflation rates is due to 3 factors, namely the increase in international prices of food commodities, especially those imported from Egypt such as wheat and edible oils, the increase in global commodity prices , especially energy, an increase in money supply or monetary liquidity and the first and second factors outside the scope of monetary policy The central bank, where workers return to the global causes that have affected the world as a whole such as disruption of supply chains, potential geopolitical risks such as war between Russia and Ukraine, climate change, lower productivity growth and demographic change.
2- The new administration of the Central Bank of Egypt will adopt a monetary policy in line with the new trends of the global economy, and aims to attract foreign currencies from a wide range of sources and stimulate the investment climate in Egypt, in addition to a broad consensus among the country’s financial and monetary officials, which is a commitment to a flexible and free exchange rate.
3- A limited impact on the equity portfolio, as the foreign investor is still cautious with regards to entering emerging markets in general and the exchange rate in Egypt takes up most of the investment decision. it will not attract foreign investors to buy the Egyptian pound and it will not support the money supply; Because the yield on dollar bonds with different maturities is currently at 15%, which will be an obstacle to investing in Egyptian pound treasury bonds with yields close to 12%.
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