The Monetary Policy Committee (MPC) at the Central Bank of Egypt (CBE) will hold its fifth periodical meeting this year on 30 July.
During the meeting, it will decide on the CBE’s principal interest rates, used by other banks in the local market.
In its three past meetings, held in February, April and June, the MPC decided to fix the CBE’s main interest rates at 8.75% for the overnight deposit rate and 9.75% for the overnight lending rate. The MPC maintained the main operations, credit and discount rates at 9.25%.
According to bank analysts and financial directors, it is widely anticipated that in the upcoming meeting, the MPC will decide on and fix interest rates at the CBE, for the fourth consecutive time.
According to a previous MPC statement, although it is expected that investments directed to the major local projects, such as the Suez Canal Development Project, would help increase economic growth, the decrease in growth rate for the total National Domestic Product (NDP) would occur because of the risks the international economy is facing. The risks are still present, especially under the umbrella of the challenges that face some Euro zone countries, and the slow growth of the emerging economies.
“It is expected that the MPC would make a decision to fix interest rates in the CBE, as it did before in February, April and June,” said Haitham Abdel Fattah, General Director of Treasury at the Industrial Development and Workers Bank of Egypt.
Abdel Fattah does not expect the CBE to increase interest rates over the Egyptian pound, to face the fallouts of the latest increase of the Egyptian pound against the US dollar over the goods in the market.
According to Abdel Fattah, the Eurozone is Egypt’s largest commercial partner. The Euro’s decrease against the Egyptian pound, as well as the decrease of the main goods on the market, would therefore compensate the dollar’s increase against the Egyptian pound.
Tamer Youssef, Head of Treasury and Capital Markets at a foreign bank operating in Egypt, anticipates that the MPC would fix the interest rates over the Egyptian pound for the fourth consecutive time this year, during its upcoming meeting.
According to Youssef, the decrease in inflation rates during June, in addition to the high expectations regarding the national and international decrease in goods price over the next period, will push the CBE to fix the Egyptian pound’s interest rates, regardless of any increase in inflation rates.