Egypt’s central bank is likely to hike interest rates by 3 percent during the upcoming monetary policy meeting due on March 30, HSBC said in a recent report.
In February, the Central Bank of Egypt (CBE)’s Monetary Policy Committee (MPC) had convened its first meeting for the year, leaving the overnight deposit rate, overnight lending rate, and the rate of the main operation intact at 16.25 percent, 17.25 percent, and 16.75 percent, respectively.
According to HSBC, the interest rate hikes will put more burden on borrowing and slow growth rate.
The CBE has to follow an inflation-targeted monetary policy to have a real return on investment in the Egyptian pound, the bank report read.
HSBC further said the real return on investment currently stands at -15 percent against inflation; therefore, the CBE will have to follow a “very stringent” monetary policy.
Earlier this month, Goldman Sachs Group expected the CBE would raise interest rates by nearly 300 basis points during its March 30 meeting.
In 2022, the CBE increased interest rates four times to 8 percent.
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