Cairo – Muabsher: Banks in Egypt may lower interest rates due to the Central Bank of Egypt’s (CBE) decision to raise reserve requirement for banks to 14%, head of research at Pharos Holding for Financial Investments Radwa El-Swaify told Bloomberg.
This decision will push banks to reduce deposit interest rates, she highlighted.
Additionally, demand for government debt instrument will increase in, leading to higher cost of borrowing, she added.
El-Swaify had previously forecasted to Bloomberg that the CBE would lift the cash reserve ratio (CRR) in the period between 2001 and 2012.
El-Swaify noted that the CBE is trying to restrain liquidity through raising CRR, instead of changing interest rates.
On 3 October, the CBE announced boosting CRR to 14% from 10% starting from 10 October 2017.
The CRR settled at 14% between 2001 and 2012, and was gradually lowered since January 2011 by 4%, until it reached 10% to support the Egyptian banking sector.
