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Scenarios for CBE Decision on Interest Rate in Egypt

Many citizens and investors are awaiting the Central Bank of Egypt’s meeting to settle the interest rate in Egypt, especially after the US Federal Reserve’s recent decision to raise the interest rate by 25 basis points.

The next central bank meeting is scheduled on May 18.

The first expected scenario for the Central Bank meeting

Economic researcher Yassin Ahmed expects the central bank to fix the interest rate at its next meeting, saying that the general budget does not bear the burden of raising interest rate.

He explained that every one percent increase in the interest rate causes the state’s general budget to bear an additional debt burden of about LE32 billion, which leads to an increase in the interest cost in the state’s general budget, and thus impacts the debt and the budget deficit.

Ahmed told Al-Masry Al-Youm that raising interest rates will not bear fruit, as raising interest rates in the past did not achieve the desired results nor did it reduce inflation rates.

The second expected scenario for the Central Bank meeting

According to Ahmed, the second expected scenario is a decrease in the exchange rate of the Egyptian pound as the exchange rate in Egypt is considered an obstacle to new foreign direct investments.

This is because the varying exchange rates affect the conversion of profits into dollars for investors in Egypt in the future.

Source: Egypt Independent

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