Know your benefit from the central bank’s decision to cut interest...

Al Fajr Gate follows up the implications of the Central Bank’s decision to cut interest rates by 50 points at the Monetary Policy Committee meeting last Thursday, which is in the interest of the citizen researcher to buy goods and services in installments, in addition to the decline in the cost of lending for small and medium enterprises. Dr. Mohamed Abdel-Wahab, a financial expert, said that the Central Bank of Egypt succeeded in following monetary and financial policies that kept inflation rates according to the rate set by the bank for the current fiscal year, which is 9% (± 3%) until the end of 2020.

He explained that the decision of the Monetary Policy Committee of the Central Bank in its meeting yesterday, Thursday, to reduce the rate of deposit and lending for one night and the price of the main operation of the central bank by 50 basis points to reach 8.75%, 9.75% and 9.25%, respectively, and the credit and discount rate were also reduced. By 50 basis points to reach 9.25%, which gives more stimulus to the economy, which is a continuation of the expansionary policy of the Central Bank of Egypt that it has pursued since February 2018, in its desire to reduce unemployment rates and boost growth and economic activity.

Abdel-Wahab emphasized that Egypt is one of the few countries that kept its growth rates positive despite the Corona crisis, as the World Bank expected Egypt to maintain positive growth rates exceeding 3.5% for this year, which is what many strong and advanced economies have failed.

Abdel-Wahab indicated that the interest rate cut decision will positively affect the activity of the Egyptian capital market, which is expected to witness an increase in its indicators during the next week.

Abdel-Wahab pointed out that reducing interest indirectly affects the sectors of goods and services, especially companies that depend directly on consumer purchases, and that the real estate sector companies on the Egyptian Stock Exchange will be affected, but in small percentages, by the decision to reduce interest, and the sector aspires to further reduce interest rates during the coming period. It affects reducing borrowing costs, increasing corporate profitability, and increasing cash flows, which encourages companies to plan well for the future and increases stock prices for listed companies, which increases confidence in the real estate sector.

The Monetary Policy Committee of the Central Bank of Egypt decided in its meeting yesterday evening to reduce the rate of deposit and lending for one night and the rate of the main operation of the central bank by 50 basis points to reach 8.75%, 9.75% and 9.25%, respectively. The credit and discount rate was also reduced by 50 basis points to 9.25%.

The committee explained that the most important reasons for taking this decision are the decrease in the annual rate of general urban inflation, to record 3.4% in August 2020 compared to 4.2% in July 2020, which is the second lowest rate recorded – after October 2019 – in nearly fourteen years. The decline in inflation continued, supported by the containment of inflationary pressures, which was due to the decrease in the annual contribution of food commodities to a greater degree than the increase in the annual contribution of non-food commodities. This was driven by the decline in the prices of fresh vegetables, unlike their seasonal pattern for the second month in a row. Consequently, the monthly rate of urban inflation continued to reflect the decline in food commodity prices and the rise in non-food commodity prices for the fourth consecutive month. In light of this, the annual rate of core inflation rose to 0.8% in August 2020 compared to 0.7% in July 2020.

The committee pointed out that the preliminary data showed that the real growth rate of the gross domestic product reached 3.5% during the fiscal year 2019/2020, compared to 5.6% during the first half of the same year. The unemployment rate recorded 9.6% during the second quarter of 2020, compared to 7.7% during the first quarter of the same year.

These developments came as a result of the negative impact of the spread of the Corona pandemic on the real economy. The data indicate that some initial indicators stabilized during July and August of 2020 after the noticeable improvement recorded in June of 2020.

Globally, economic activity remains weak despite some recovery. Global oil prices have generally stabilized, and global financial conditions have continued to improve despite the prevailing uncertainty.

The committee added in its statement: “In light of the above, and as a result of containing inflationary pressures and all domestic and international developments, the Monetary Policy Committee decided to reduce the basic interest rates of the Central Bank by 50 basis points.

This decision is consistent with achieving price stability in the medium term. The lowering of base interest rates at the committee meeting also provides appropriate support for economic activity at the present time.

In the following, we review the reasons for the monetary policy committee of the Central Bank of Egypt, in its meeting on Thursday, September 24, 2020, to reduce the rate of return on deposit and lending overnight and the price of the main operation of the central bank by 50 basis points to reach 8.75%, 9.75% and 9.25%, respectively. Arrangement. The credit and discount rate was also reduced by 50 basis points to 9.25%.

The reasons are:

Advertisements

The annual rate of general urban inflation fell to 3.4% in August 2020 compared to 4.2% in July 2020, which is the second lowest rate on record – after October 2019 – in nearly fourteen years. The decline in inflation continued, supported by the containment of inflationary pressures, which was due to the decrease in the annual contribution of food commodities to a greater degree than the increase in the annual contribution of non-food commodities. This was driven by the decline in the prices of fresh vegetables, unlike their seasonal pattern for the second month in a row. Consequently, the monthly rate of urban inflation continued to reflect the decline in food commodity prices and the rise in non-food commodity prices for the fourth consecutive month. In light of this, the annual rate of core inflation increased to 0.8% in August 2020 compared to 0.7% in July 2020.

Preliminary data showed that the real growth rate of the gross domestic product reached 3.5% during the fiscal year 2019/2020, compared to 5.6% during the first half of the same year. The unemployment rate recorded 9.6% during the second quarter of 2020, compared to 7.7% during the first quarter of the same year. These developments came as a result of the negative impact of the spread of the Corona pandemic on the real economy. The data indicate the stability of some initial indicators during the months of July and August of 2020 after the noticeable improvement recorded in the month of June 2020.

Globally, economic activity remains weak despite some recovery. Global oil prices have generally stabilized, and global financial conditions have continued to improve despite the prevailing uncertainty.

In light of the above, and as a result of containing inflationary pressures and all domestic and global developments, the Monetary Policy Committee decided to reduce the basic interest rates of the central bank by 50 basis points. This decision is consistent with achieving price stability in the medium term. Lowering the base return rates at the committee meeting also provides adequate support for economic activity at the present time.

The committee will continue to follow all economic developments and will not hesitate to amend its policy to maintain monetary stability. The Monetary Policy Committee of the Central Bank of Egypt decided, in its meeting on Thursday, September 24, 2020, to reduce the rate of deposit and lending for one night and the rate of the main operation of the central bank by 50 basis points. It came to 8.75%, 9.75% and 9.25%, respectively. The credit and discount rate was also reduced by 50 basis points to 9.25%.

The annual rate of general urban inflation fell to 3.4% in August 2020 compared to 4.2% in July 2020, which is the second lowest rate on record – after October 2019 – in nearly fourteen years. The decline in inflation continued, supported by the containment of inflationary pressures, which was due to the decrease in the annual contribution of food commodities to a greater degree than the increase in the annual contribution of non-food commodities. This was driven by the decline in the prices of fresh vegetables, unlike their seasonal pattern for the second month in a row. Consequently, the monthly rate of urban inflation continued to reflect the decline in food commodity prices and the rise in non-food commodity prices for the fourth consecutive month. In light of this, the annual rate of core inflation increased to 0.8% in August 2020 compared to 0.7% in July 2020.

Preliminary data showed that the real growth rate of the gross domestic product reached 3.5% during the fiscal year 2019/2020, compared to 5.6% during the first half of the same year. The unemployment rate recorded 9.6% during the second quarter of 2020, compared to 7.7% during the first quarter of the same year. These developments came as a result of the negative impact of the spread of the Corona pandemic on the real economy. The data indicate the stability of some initial indicators during the months of July and August of 2020 after the noticeable improvement recorded in the month of June 2020.

Globally, economic activity remains weak despite some recovery. Global oil prices in general have stabilized, and global financial conditions continued to improve despite the prevailing uncertainty.

In light of the above, and as a result of containing inflationary pressures and all domestic and global developments, the Monetary Policy Committee decided to reduce the basic interest rates of the central bank by 50 basis points. This decision is consistent with achieving price stability in the medium term. Lowering the base return rates at the committee meeting also provides adequate support for economic activity at the present time.

The committee will continue to follow all economic developments and will not hesitate to adjust its policy to maintain monetary stability.

The Monetary Policy Committee of the Central Bank of Egypt decided, in its meeting on Thursday, 24 September 2020, to reduce both the overnight deposit and lending rate and the central bank’s main operation rate by 50 basis points to reach 8.75%, 9.75% and 9.25%, respectively. The credit and discount rate was also reduced by 50 basis points to 9.25%.

The annual rate of general urban inflation fell to 3.4% in August 2020 compared to 4.2% in July 2020, which is the second lowest rate recorded – after October 2019 – in nearly fourteen years. The decline in inflation continued, supported by the containment of inflationary pressures, which was due to the decrease in the annual contribution of food commodities to a greater degree than the increase in the annual contribution of non-food commodities. This was driven by the decline in the prices of fresh vegetables, unlike their seasonal pattern for the second month in a row. Consequently, the monthly rate of urban inflation continued to reflect the decline in food commodity prices and the rise in non-food commodity prices for the fourth consecutive month. In light of this, the annual rate of core inflation rose to 0.8% in August 2020 compared to 0.7% in July 2020.

Preliminary data showed that the real growth rate of the gross domestic product reached 3.5% during the fiscal year 2019/2020, compared to 5.6% during the first half of the same year. The unemployment rate recorded 9.6% during the second quarter of 2020, compared to 7.7% during the first quarter of the same year. These developments came as a result of the negative impact of the spread of the Corona pandemic on the real economy. The data indicate the stability of some initial indicators during the months of July and August of 2020 after the noticeable improvement recorded in the month of June 2020.

Globally, economic activity remains weak despite some recovery. Global oil prices have generally stabilized, and global financial conditions have continued to improve despite the prevailing uncertainty.

In light of the above, and as a result of containing inflationary pressures and all domestic and global developments, the Monetary Policy Committee decided to reduce the basic interest rates of the central bank by 50 basis points. This decision is consistent with achieving price stability in the medium term. Lowering the base return rates at the committee meeting also provides adequate support for economic activity at the present time.

The committee will continue to follow all economic developments and will not hesitate to adjust its policy to maintain monetary stability.