In a few hours, the “Central Bank of Egypt” resolves the controversy over interest rates

At a time when the monetary policy committee of the Central Bank of Egypt meets this evening, Thursday, to determine the fate of interest rates, everything seems to indicate that they remain unchanged for the seventh consecutive time.

Analysts and research and research firms believe that there are several reasons forcing the Central Bank of Egypt to stabilize interest rates, overcome by the stability of inflation rates to the goals of the Egyptian government and of the Central Bank.

According to recent data from the Central Agency for Public Mobilization and Statistics in Egypt, Egyptian annual inflation climbed to 5.7% during the month of August, with monthly inflation reaching an increase of 0.1 % on a monthly basis versus an increase of 0.9%. monthly last July.

The state of global stability with regard to inflation and interest rates may cause the Central Bank of Egypt to keep interest rates unchanged.

Various price indicators point to a recent increase in global inflation, with the euro area inflation rate reaching its highest level in 10 years, registering a level of 3%.

The FAO Food Price Index also rose again in August, amid rising prices for wheat and oils, both of which Egypt relies on imports for supplies. The increase in the intensity of inflationary pressures globally is expected to affect domestic prices, especially if the Egyptian government revises the prices of certain foodstuffs.

Although inflation expectations still revolve around the Central Bank of Egypt’s target, the risks of rising commodity prices, global supply bottlenecks and high transport costs will emerge in the future. the coming months, indicating the possibility of an increase in inflation rates.

In light of these mounting inflationary pressures, the Central Bank of Egypt will place maintaining inflation expectations on its priority list, which will provide incentives to stabilize interest rates rather than modify them.

The Monetary Policy Committee of the Central Bank of Egypt decided last November to cut the overnight deposit and loan rates and the central bank’s main transaction rate by 50 basis points to respectively 8, 25%, 9.25% and 8.75%.

However, at its August meeting, the Monetary Policy Committee decided to set the overnight deposit and loan rates and the principal transaction rate at the level of 8.25% and 9.25%, respectively. , for the sixth consecutive time. It also decided to keep the credit and discount rate at 8.75%.