Egypt: MPC expected to raise policy rates by 100 bps – HC Securities

Egypt: MPC expected to raise policy rates by 100 bps – HC Securities

Cairo – The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) is forecast to increase the policy rates 100 basis points (bps) based on the country’s current situation in the meeting scheduled 18 May, according to Financial Analyst and Economist at HC Securities & Investment, Heba Monir.

Monir noted that the recent deceleration in Egypt’s inflation rate will be short-lived, expecting inflation to inch up 1% on a monthly basis in May. The projections follow the recent increase in diesel prices and changes in the ration cards system, averaging at 30.2% for the second half (H2) of 2023 according to HC Securities’ numbers.

The financial analyst added: “The banking sector’s net foreign liabilities (NFL), including the CBE, widened to $24.50 billion in March from $23 billion in February, according to CBE data. Excluding the CBE, the banking sector’s NFL widened significantly to $15.60 billion in March from $13.80 billion in February.”

She highlighted that given the pressure on the local currency, Egypt’s one-year certificates of deposit (CDs) reached a record high. Monir elaborated that the current account registered a surplus of $1.41 billion in the second quarter (Q2) of fiscal year (FY) 2022/2023 for the first time in many years