The research unit at Beltone Financial Holding suggested that the Monetary Policy Committee of the Central Bank of Egypt would move to raise interest rates during the meeting scheduled to be held on May 19.
She indicated, according to a recent research note, that the developments in annual general inflation readings confirm the expected upward trend from our side for inflation, above the CBE’s target range of 7% (+/-2%) on average by the fourth quarter of 2022.
Beltone explained that in light of the rise in food commodity prices on a monthly basis, which coincided with the noticeable increase in commodity and fuel prices globally, we expect the Central Bank of Egypt to raise interest rates between 50 to 100 basis points during the next Monetary Policy Committee meeting, and amid increasing global instability. .
Beltone continued, “We believe that the need to maintain investment attractiveness in the fixed income market, especially with rising interest rates globally, as well as high inflation rates, put pressure on flows to emerging markets, which supports our vision.”
And the Central Agency for Public Mobilization and Statistics had announced that the annual inflation rate in Egyptian cities had risen to its highest level in nearly three years last April, after the rise in food prices and the devaluation of the pound last March, accelerated the rise in consumer prices. The annual inflation rate jumped to 13.1 percent last month, its highest level since May 2019, from 10.5 percent in March.
The Central Bank of Egypt also announced an increase in the annual core inflation rate, reaching 11.9% last April, compared to about 10.1% during the previous month of March.
He explained that the core consumer price index recorded a monthly rate of 2.4% last April, compared to 0.7% in the same month last year, and a monthly rate of 3.1% in March 2022.
The Central Bank of Egypt raised interest rates by 100 basis points and allowed the pound to decline against the dollar in a surprise meeting on March 21, to curb inflation and support economic activity.
The rate of return on both deposit and overnight lending is currently 9.25% and 10.25%, respectively, while the main transaction rate and the discount and credit rate are 9.75% each.