The Asset-Liability Committee (ALCO), which is responsible for determining interest levels in banks, will start holding meetings early next week to discuss adjusting interest rates on their savings and loan products, after the central bank’s decision today to raise interest rates by 2% at once.

The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to raise the basic return rates at the Central Bank by 2%, to reach 18.25% for deposits, 19.25% for lending, and 18.75% for the credit and discount rate and the price of the main operation at the Central Bank.

The Central Bank’s decision was widely expected after the jump in the inflation rate at the end of last February.

In a direct reaction to the Central Bank’s decision, interest rates on variable-return certificates and some loan products were automatically priced at the Central Bank’s basic interest rates.

There are about 29 variable-return certificates issued by 24 banks in the Egyptian market, in addition to a large number of variable-return loan products.

This comes as the market awaits the first reaction to the return on debt instruments, which are scheduled to be offered on Sunday and the next Monday, after the Central Bank of Egypt’s decision to raise its basic interest rates today, Thursday, by 3% at once.

On Sunday, on behalf of the Ministry of Finance, the Central Bank of Egypt will offer two tenders for treasury bills worth EGP 40bn, the first with a value of EGP 22.5bn for a period of 91 days, and the second with a value of EGP 17.5bn for a period of 273 days, while on Monday a bond tender with a value of EGP 3bn in three-year bonds.

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