02:58 PM
Saturday 30 January 2021
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I wrote – Manal Al-Masry:
Bankers expected that the Central Bank of Egypt would proceed to fix the interest rate on deposit and lending at the first meeting of the monetary policy committee next Thursday.
Bankers told Masrawy that despite the positive indicators of the Egyptian economy, the central bank will tend to fix the interest rate, to monitor external economic variables, and the effectiveness of the Corona vaccine, especially after the central bank reduced the interest more than once last year.
The central bank had cut interest rates 4% over the past year on more than one meeting.
The Monetary Policy Committee will hold a meeting on Thursday, February 4, to consider the interest rate, which is the first meeting this year.
Mohamed Abdel-Al, a board member in a private bank, expected that the central bank would keep the interest unchanged at the monetary policy committee meeting next Thursday due to the uncertainty that the global economy is going through due to the difference in the effectiveness of the Corona vaccine, and its failure to spread around the world.
He pointed out that the Central Bank had fixed the interest in its previous meeting, but it was confirming the taste of the reduction, given the tendency of most banks to reduce interest on their savings certificates, especially the National Bank and Egypt.
He said that the Central Bank will be slow to reduce the interest in light of the initiatives supported by an 8% interest in the tourism sector, industry and contracting, which contributes to prudence before reducing the interest again.
According to Abdel-Al, after the next meeting, the central bank will tend to cut interest after announcing it set new targets for inflation at 7%, with an increase or decrease of 2% at the end of the fourth quarter of 2022.
Mahmoud Nagla, Executive Director of Money Markets and Fixed Income at Al-Ahly Financial Investments, suggested that the Central Bank will fix interest at the next meeting due to the tendency of some countries in emerging markets to raise interest, such as Turkey, which makes him wait some time to monitor the behavior of foreign investors in Egyptian treasury bills and bonds, or they will go Other countries due to the high interest offered on our competing debt instruments.
He added that the Central Bank has made a rate cut more than once in the recent period, starting with the exceptional 3% reduction last March as part of precautionary measures to confront the Corona virus, then a 1% reduction twice in the months of April and November, which does not require a new cut until a quarter The second of this year, to be reduced again during the year.
Although all the positive indicators are in the interest of the Egyptian economy, such as the decline in inflation, and the regular entry of foreign investors, this does not prevent the central government’s caution in monitoring international economic and political changes, according to Najla.
Muhammad Badir, a banking expert and a member of the board of directors of a government bank, agreed with the previous views on the central fixing of interest in the next meeting, provided that the reduction would be repeated at the meeting after the next.
He added that the CBE needs to monitor the improvement of inflation rates, and to maintain the inflows of indirect foreign investment, which supports the trend to stabilization.
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