The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) may gradually raise interest rates this year to absorb inflationary pressures amid global uncertainty and growing political tensions between Russia and the West.
The MPC, which is scheduled to meet on March 24, might either keep the rates unchanged or raise them by 50 basis points. In its previous meeting on February 3, the MPC left the rates on hold for the 10th time in a row.
The overnight deposit, lending and the main operation rates currently stand at 8.25, 9.25 and 8.75 per cent respectively, according to CBE data.
Urban inflation rose to 8.8 per cent in February, up from 7.3 per cent a month earlier, data from the state-run Central Agency for Public Mobilisation and Statistics (CAPMAS) showed. CAPMAS attributed the increase to higher prices of vegetables group (19.6 per cent), meat and poultry group by (6.1 per cent) and the fruit group by (5.5 per cent).
Prices of the cereals and bread group increased by 2.2per cent, according to CAPMAS.
Despite the recent price hikes, the inflation rate remained within seven per cent (±2 percentage points)as targeted. Real gross domestic product (GDP) will be one of the key determinants of the monetary policy in the coming months as Egypt is seeking to ward off the repercussions of the Russia-Ukraine crisis.
The monetary policy’s main challenge will be maintaining a stabilized foreign exchange rate to boost the local business climate and lure more inflows of foreign investment.
CBE to launch instant payment soon
The CBE is scheduled to launch an instant payment system for individuals on March 22. The local banks are expected to finalize all technical preparations to apply the mechanism by the end of April.
The instant payment network will mark a qualitative leap in the country’s financial and banking transactions. The new mechanism will enable individuals to carry out financial transactions and bank transfers instantly 24/7 through public holidays.
E-payment has been on the rise in Egypt with the number of e-wallets jumping to 26 million and e-commerce transactions reaching LE30 billion, according to CBE data. A total of 23 banks that provide e-wallet services in Egypt.
Meanwhile, transactions via points of sale (POS) rose to LE170 billion up from LE110 billion and e-wallet transactions increased to LE268 billion up from LE88 billion.
Moreover, the number of ATMs rose to 18,500 in 2021 up from 13,500 in 2018, according to CBE data. POS jumped to 740,000 in 2021 up from 68,000 in 2018.
E-payment solutions include mobile transfers, electronic funds, debit, credit and prepaid cards, smart cards, e-money and e-wallets. A good standardization and organization of e-payment solutions should boost e-commerce in the medium and long terms.
The local banking industry has been upgrading its mobile services through the provision of a wide range of applications, drawing on the nation’s growing Internet users.
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