BNP Paribas expects CBE to raise interest rates by up to 300 bps in Q1 2024
Updated 1/11/2024 7:11:00 AM
Arab Finance: The Central Bank of Egypt (CBE) is forecasted to hike policy rates by 200 to 300 basis points (bps) in the first quarter (Q1) of 2024, accompanied by a change in the exchange rates, Mohamed Abdel Majeed, Middle East and North Africa economist at BNP Paribas, told Al Arabiya.
The recently offered 27%-yield certificates of deposits (CDs) by Banque Misr and the National Bank of Egypt (NBE) are a key witness to the CBE’s direction towards raising interest rates, Abdel Majeed explained.
However, he sees that the CDs would not contribute significantly to withdrawing the growing liquidity in the Egyptian economy, as investors compare the return on these certificates with the spread in forex rates between the parallel and official exchange markets.
In 2023, the CBE raised interest rates by a total of 300 basis points (bps), including a 200-bp hike in March and a 100-bp increase in August.
He also added that the exchange rate could see movements by the end of March or after Eid Al-Fitr holiday in April.
He also expects a delegation from the International Monetary Fund (IMF) to visit Egypt before the end of this month, followed by the completion of the first and second reviews, and this may take a month or more.
Moreover, the economist expected the parallel market to remain active until mid-2026.
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