Does Corona affect the next interest rate meeting? .. An expert answers

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Days and the Monetary Policy Committee of the Central Bank of Egypt will hold its meeting on April 2 to determine interest rates, amid global confusion and fears of the spread of the Corona virus, as that meeting comes with the annual urban inflation rates falling to 5.3% in February 2020 compared to 7.2% in January 2020, while the monthly inflation rate was zero (0%) compared to 0.8% in January 2020.

The economist, Hany Aboul Fotouh, suggested that the monetary policy committee in the Central Bank of Egypt would not, during its next meeting, reduce interest rates, especially that the implications of the Corona virus have not been determined as a result of the changes that occur daily on the spread of the virus, and its impact on the economic sectors, supply chains and transportation movement Around the world, the market’s need for liquidity, as well as maintaining Egypt’s competitive position as an attractive market for investment in domestic debt instruments.

The report of the Central Agency for Public Mobilization and Statistics announced that the annual general inflation rate decreased to 4.9% in February compared to 6.8% in January, while the monthly inflation rate was “zero” in February compared to 0.8% in January. At the same time, a statement clarified The Central Bank of Egypt, that the annual basic inflation rate in February fell to 1.9% compared to 2.7% in January, as the monthly basic inflation rate reached 0.2% in February 2020 compared to 0.7% last January, and against a rate of 1% in February 2019.

Abu Al-Fotouh explained that these readings indicate a rise in the real interest rate, explaining that the real interest rate is the interest rate that has been modified to remove the effects of inflation to reflect the real cost of money to the borrower and the true return of the lender or investor, and the real interest rate of the investment is calculated as the amount that The nominal interest rate is higher than the inflation rate.

He continued: “With this, Egypt will be among the highest countries in the world in the real interest rate, after inflation has fallen to its lowest level in nearly 7 years, and provides good incentives for investors in domestic debt instruments.”

Aboul Fotouh believes that there are not enough justifications to postpone the convening of the Monetary Policy Committee of the Central Bank of Egypt, which is scheduled to meet in early April, as the main determinants of its decision on interest rates are sufficient, and that the US Federal Reserve and the Bank of England held their meeting to determine interest rates earlier This March.



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