What does lowering the interest rate mean? .. Details

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What does the interest rate cut mean? .. Details, Friday, November 13, 2020 12:44 a.m.

The Monetary Policy Committee of the Central Bank of Egypt announced the reduction of interest rates on banking transactions by half a percentage point, so that the interest rate on deposits is about 8.25%, and borrowing for one night is 9.25%, and the main operation of the central bank is by 8.75%.

The Central Bank also decided the credit and discount rate, recording 8.75%.

The decision to reduce interest rates is not the first since the beginning of this year, but it is the No. 3 procedure for reducing, as the total interest rates were reduced by 4% over the course of 3 previous meetings, the last of which was on 24 September.

The reduction decision means that it is a pre-emptive measure to confront any inflationary waves that may be caused by the second wave of the Corona virus, after a number of European countries, led by the United Kingdom, France and the United States of America, announced the resort to partial closure until next December, to reduce the general and economic effects after the outbreak of that wave.

The Central Bank of Egypt seeks to send a message about the interest rate reduction decisions regarding the strength of the national economy and the monetary and financial policies that the economic reform program adopted and completed by the bank itself in mid-March to confront the initial waves of the Corona pandemic.

The Central Bank also seeks to motivate investors to borrow from the banking system, given that the interest rates on borrowing have become disciplined and at the required rates, which means encouraging investment and the rotation of the wheel of production as the root solutions to confront inflation and work to stimulate consumption and provide job opportunities and Egyptian exports to be reflected in the cash reserve. .
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