France's economy expands on service, inventories    Cairo Airport running smoothly after outage – Cabinet    Egypt, France airdrop aid to Gaza amid growing humanitarian crisis, global criticism of Israel    Supply minister discusses strengthening cooperation with ITFC    Egypt launches initiative with traders, manufacturers to reduce prices of essential goods    SCZONE chief discusses strengthening maritime, logistics cooperation with Panama    Egypt strengthens healthcare partnerships to enhance maternity, multiple sclerosis, and stroke care    Egypt keeps Gaza aid flowing, total tops 533,000 tons: minister    Egypt reviews health insurance funding mechanism to ensure long-term sustainability    Gaza on verge of famine as war escalates, ceasefire talks stall    Gaza crisis, trade on agenda as Trump hosts Starmer in Scotland    Egyptian president follows up on initiatives to counter extremist thought    Indian Embassy to launch cultural festival in Assiut, film fest in Cairo    Egyptian aid convoy heads toward Gaza as humanitarian crisis deepens    Culture minister launches national plan to revive film industry, modernise cinematic assets    Egypt will keep pushing for Gaza peace, aid: PM    I won't trade my identity to please market: Douzi    Egypt welcomes 25-nation statement urging end to Gaza war    Sisi sends letter to Nigerian president affirming strategic ties    Egypt, Senegal sign pharma MoU to unify regulatory standards    Two militants killed in foiled plot to revive 'Hasm' operations: Interior ministry    Egypt, Somalia discuss closer environmental cooperation    58 days that exposed IMF's contradictions on Egypt    Egypt's EHA, Huawei discuss enhanced digital health    Foreign, housing ministers discuss Egypt's role in African development push    Egypt reveals heritage e-training portal    Three ancient rock-cut tombs discovered in Aswan    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Egypt's Irrigation Minister urges scientific cooperation to tackle water scarcity    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Strong expectations that CBE's basic interest rates will be cut by 50 to 150 basis points
Published in Daily News Egypt on 26 - 09 - 2019

The Monetary Policy Committee (MPC) affiliated with the Central Bank of Egypt (CBE) will hold its regular sixth meeting of the year on Thursday to discuss the future of basic yield in the CBE, which is the leading indicator for the direction of interest rates on the Egyptian pound in the local market.
MPC ecided at its meeting on 22 August 2019 to reduce the interest rate by 150 basis points for overnight lending, overnight deposit, and CBE's main operation, to settle at 14.25%, 15.25%, and 14.75% respectively.
The committee also decided to reduce the credit and discount rate by the same percentage to 14.75%.
The CBE aims to achieve an inflation rate of 9% (±3%) during the fourth quarter of 2020, and price stability in the medium term.
Earlier this month, the CBE revealed that the annual rate of core inflation dropped to 4.9% by the end of August 2019, compared to 5.9% in July 2019
, its lowest level in more than 6 years.
The CBE said its core consumer price index, set for its part, recorded a negative monthly rate of 0.4% in August 2019, compared to a positive rate of 0.1% at the end of July 2019.
Most of the experts surveyed by Daily News Egypt forecast a rate cut on Thursday's meeting.
Mohamed Abdel Aal, a banking expert and board member of the Suez Canal Bank, said that the CBE is likely to cut interest rates again at Thursday's meeting rather than maintain the rate this time as the monetary easing cycle accelerated worldwide and the US Federal Reserve cut interest rates again by 0.25%.
The wave of global monetary easing, allow the CBE to cut interest rates further, without fear of capital outflaws in debt instruments.
He added that several factors support easing including the appreciation of Egyptian pound against the US dollar and the decline in inflation rate below the CBE target.
Abdel Aal stressed the importance of cutting interest rates to boost economic growth, pointing out that the rate cut in August by 1.5% was good but not sufficient to encourage investors to borrow, as the level of interest on bank loans is still high.
Similarly, Tarek Metwally, a banking expert and former executive board member of BLOM Bank Egypt, said all indicators suggest a possible rate cut of between 1% and 1.5% at a meeting of the MPC on Thursday.
Same views was carried by Haitham Abdel Fattah, head of the treasury and capital markets sector at the Industrial Development Bank, who believes that all conditions encourage the CBE to continue the monetary easing cycle, and to reduce interest rates by between 1% and 1.5%.
Abdel Fattah pointed out that inflation rates have fallen below 5% for core inflation and less than 8% for headline inflation, which supports further cut in interest rates.
Bank expert Hany Abou El-Fotouh predicted that the MPC will move to reduce interest rates by% 1 to 1.5%, especially after the decision of the US Federal Reserve to cut interest rates by 0.25% for the second time in a row.
Abou El-Fotouh pointed out that this would encourage the CBE to reduce interest rates, stressing that the interest rate cut will stimulate the economy in general, and help to get out of the recession dominating the markets, and will contribute to reduce the burden of domestic public debt.
Beltone Investment bank expected the CBE to cut interest rates by 50-100 basis points at the MPC meeting on Thursday, cutting them by about 300 basis points in 2020.
Monette Doss, the company's macroeconomic and banking sector analyst explained that annual inflation fell below 9% year on year, within the CBE's target of 9% (+/-3%) in the fourth quarter of 2020, allowing the CBE to continue its monetary easing policy to stimulate economic growth and activity of the money market.
“Furthermore, in the global context of monetary easing, the European Central Bank cut its deposit interest rates by 10 basis points to -0.5% last week, as Egyptian Treasury bills continue to provide attractive returns and encourage inflows from carry trade. We, therefore, expect the Central Bank of Egypt to cut interest rates by 100 basis points at its next meeting,” she said.


Clic here to read the story from its source.