Will Egyptian banks issue savings certificates with a 25% return again?

Analysts expected the Central Bank of Egypt to raise interest rates between 200 and 300 basis points at the meeting of the Monetary Policy Committee next Thursday.

A number of analysts expected the Central Bank of Egypt to raise interest rates by a ratio ranging between 2 to 3% to control inflation rates in light of its recent jumps, which exceeded the 30% levels.

certificates with a high yield exceeding 20%

The analysts also expected the banks to issue certificates with a high yield exceeding 20%, especially after the start of maturing the 18% certificates issued in March of last year.

The macroeconomic analyst at HC, Heba Munir, said that the Central Bank of Egypt will raise interest rates by 2%, at the expected meeting next Thursday, with the aim of controlling the increasing inflation rates.

Hiba Munir predicted that the inflation rate will reach 35.9% by the end of next July.

Increase in inflation rates

Heba Munir believes that the expected increase in inflation rates will be supported by the increase in gasoline prices, in addition to the expected increase in electricity prices by next July in conjunction with the liberalization of food prices such as rice.

Heba Munir also expected that the inflation rates will gradually decline to 30.3% next December.

Inflation rates in Egypt

Inflation rates in Egypt rose on an annual basis to 31.9%, at the end of last February according to data from the Central Agency for Public Mobilization and Statistics.

This is mainly due to the increase in the majority of food and beverage prices by 14.4%.

The core inflation rate rose to 40.3% in February compared to 31.2% last January.

Munir pointed to Egypt's need to maintain the attractiveness of investing in debt instruments, expecting that the rate of return required by investors on Egyptian treasury bills for the 12 month period will reach 25.18%.

She added that the total foreign investments in Egyptian treasury bills rose from $8 billion in December 2022 to $10.4 billion by the end of January 2023.

Savings certificates

Bank customers in Egypt are looking for high-yield savings deposits, after entering the interest maturity date of savings certificates with a yield of 18%.

 The National Bank of Egypt and the state-owned Bank of Misr launched bank savings certificates with an 18% high interest rate in March 2022.

After the first movement of the price of the pound against the dollar at that time, then they launched certificates with a 25% interest last January.

Certificates with a return of at least 25%

The economic analyst and head of the Arab Slab Company, Medhat Nafi, expected the Egyptian Central Bank to raise interest rates between 2% and 3%, in the next meeting, as well as offering certificates with a return of at least 25%. 

The interest rate comes as a result of the increase in the basic inflation rate from more than 40% at the end of last February, according to Nifa.