In a moment in which the Monetary Policy Committee of the Central Bank of Egypt is holding a meeting this evening, Thursday, to determine the fate of interest rates, all odds point to keeping them unchanged for the seventh consecutive time.
Analysts and research companies and studies believe that there are several reasons that force the Central Bank of Egypt to stabilize interest rates, overtaken by the stability of inflation rates on the objectives of the Egyptian government and the Central Bank.
According to recent data from the Central Agency for Public Mobilization and Statistics in Egypt, Egyptian annual inflation rose to 5.7% during August, with monthly inflation reaching a 0.1% monthly increase compared to a 0.9% monthly increase last year. July.
The global stable state of inflation and interest rates could lead the Central Bank of Egypt to keep interest rates unchanged.
Several price indicators point to a recent rise in global inflation, as the inflation rate in the Eurozone has reached its highest level in 10 years, registering a level of 3%.
FAO’s food price index also rose again in August, amid rising prices for wheat and oil, which Egypt relies on imports to supply. Increasing the intensity of global inflationary pressures is expected to affect domestic prices, especially if the Egyptian government revises the prices of certain food products.
Although inflation expectations still remain around the Egyptian central bank target, risks of rising commodity prices will emerge in the coming months prime, global supply bottlenecks and high transport costs, indicating the possibility of higher inflation rates.
In light of these mounting inflationary pressures, the Central Bank of Egypt will put maintaining inflation expectations on its priority list, which will push in the direction of stabilizing interest rates rather than shifting them.
The Monetary Policy Committee of the Egyptian Central Bank decided last November to reduce both the deposit and overnight lending rates and the main operating rate of the central bank by 50 basis points to reach 8.25%, respectively, 9. 25% and 8.75%.
However, at its August meeting, the Monetary Policy Committee decided to set the deposit and overnight lending rates and the main transaction rate at 8.25% and 9.25% respectively for the sixth time in a row. It also decided to keep the credit and discount rate at 8.75%.
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