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Experts pointed out that, despite the recent rise in inflation, it was necessary to reduce the interest rate, which would help to increase new investment, thereby increasing production and supply on the market, reducing prices and inflation.
"The rise in inflation is not a threat to our inflation outlook and we maintain our view that inflationary pressures will continue to be controlled in the first half of the year. year, "he said. Starting this year ». The report once again provides for the possibility of reducing interest rates in the first half of 2019, before applying the automatic pricing mechanism for petroleum products, stressing that this vision depends on the pursuit of favorable global conditions in view of the tightening of monetary policy, which supports the policy of the Central Bank of Egypt Expansionary Treasury.
The report pointed out that the interest rate cuts ahead of schedule in February, to boost investor confidence, sent a strong message of confidence in the current monetary policy, as well as confidence in the economy. evolution of the local currency, thus reducing the economic component of the decision-making process, "he said.
In a related context, British Capital Economics, British economic studies and research predicted that the central bank will lower interest rates at the next meeting by about 50 basis points, or 0.5%.
The company's expectations of continued improvement in cash flows from foreign capital have been confirmed, pointing out that foreign investors have been net buyers of Egyptian equities and bonds. State in recent weeks.
According to the report, the central bank will lower interest rates at the next meeting, based on the current low inflation rate. The start of the next fiscal year will limit the bank's ability to reduce rates again.
Fouad Abusett, an economist, said for his part that the increase in the inflation rate was generally a compressor element to raise the interest rate in order to control the flow of liquidity in the markets, thus pushing Inflation down, but added that the central bank would maintain the current interest rate for a period of no change, to be reduced over the coming period.
He added that the interest rate reduction would aim to increase the rate of investment in the domestic market and thereby increase investment, create jobs and stimulate the economy through the injection of new investments.
The Monetary Policy Committee of the Central Bank decided at its meeting last February, to reduce the rates of deposits and loans by 1% to 15.75% and 16.75% instead of 16.75 % and 17.75% respectively.
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