A number of banking experts expected the Monetary Policy Committee to leave overnight deposit and lending rates unchanged at 9.25% and 10.25% respectively, as well as repo rates at 9.75% and credit and discount rates at 9.5%, in its meeting next Thursday.
Bankers attributed this decision to the slow economic growth and market recession as well as the low inflation rate. Besides, experts see that raising interest rates would increase lending rates and accordingly increase the burden of internal debt which exceeded EGP one trillion.
However, other experts called on the Central Bank of Egypt (CBE) to raise the interest rates because the market is in need for more liquidity and less dependence on dollar resources in order to increase Egypt’s foreign cash reserves.
The decline in the growth rates and the current recession will make the Monetary Policy Committee keep interest rates unchanged as there is no need for raising or lowering interest rates, Haitham Abdel Fattah, head of treasury department at the Industrial Development and Workers Bank of Egypt, expected.
Raising interest rates will increase the burden of local debt which amounted to more than EGP one trillion due to the increase of returns on treasury bills and bonds, Abdel Fattah added, affirming that changing interest rates amid the current political instability will post negative impact on investments as lending rates will surge.
