At the end of its meeting on Thursday evening, the Monetary Policy Committee of the Central Bank of Egypt announced a reduction in interest rates for both the overnight deposit and lending rate and the Central Bank’s main operation rate by 50 basis points, or 0.5%, from 9.25% to 8.75% and from 10.25% to 9.75%. And from 9.75% to 9.25%, respectively.
Below are our comments on the following decision
1- We see this measure as a sound measure and a step in the right direction, even if it is not sufficient to stimulate the market and investment.
2- The reduction has a positive impact on reducing the budget deficit.
3- Despite the reduction, the debt instruments market remains attractive, especially for foreign investors.
4- There will not be a significant impact of the reduction on stimulating investment in the stock market.
5-The decision to reduce the interest rate, along with the National Bank’s decision to stop issuing 15% certificates, may help direct part of the funds to real estate investment.
For our part, we suggest that the path of lowering interest rates continue further to achieve the necessary stimulus for real investment and stimulate domestic consumption, in addition to not continuing to support the dollar and stabilize its price, which will contribute to increasing the competitiveness of Egyptian exports and reducing imports.