The asset-liability committees (ALCO) at banks in Egypt will begin their intensive meetings on Sunday to review the fate of interest rates on their deposits and loans, following the decision of the Central Bank of Egypt (CBE) on Thursday to cut its interest rates by 100 basis points.
Sahar El-Damaty, deputy managing director at Banque Misr, said that the ALCO committee at the bank will meet this week to discuss the fate of the bank’s deposit and lending rates.
She told Daily News Egypt that the interest rates on lending are likely to drop quickly, while the rates on deposits will need further discussions.
She refuted rumours in the market of cancelling the savings certificate offered by the bank in February 2018 that bears an interest of 17% for a period of one year, stressing that the bank has yet to make a decision about the certificate this week.
El-Damaty said that the total number of these certificates since its launch so far amounted to about EGP 11bn.
The CBE’s Monetary Policy Committee (MPC) decided to cut interest rates by 100 basis points (1%), according to a statement issued by the CBE on Thursday.
The overnight deposit rate, the overnight lending rate, and the rate of the CBE’s main operation were reduced by 100 basis points to 16.75%, 17.75%, and 17.25% respectively. The discount rate was also reduced by 100 basis points to 17.25%.
In a statement issued in March, the CBE said that the indicators issued by the Central Agency for Public Mobilisation and Statistics (CAPMAS) showed a decline in the annual inflation rate for seven months in a row to 14.4% in February 2018, its lowest since October 2016.
Egypt’s inflation rate dropped from a 30-year high of 33% year-over-year in July last year to 17.1% y-o-y in January.
Since the currency flotation in November 2016, interest rates increased by 4% (400 basis points) before February to curb Egypt’s soaring inflation.