Moody’s financial services company said Egypt’s GDP growth was expected to reach 5.6 percent in 2019 and 5.8 percent in 2020, supported by the Central Bank of Egypt’s decision to cut interest rate and the decline in the inflation rate.
In a report, Moody’s Investors Service forecast that the Central Bank of Egypt (CBE) would continue its interest rate cut policy in 2020, supported by the decrease in the inflation rate.
Moody’s hailed the CBE’s Monetary Policy Committee’s decision to cut the overnight deposit rate, the overnight lending rate, and the rate of the main operation by 100 basis points (one percent) to 13.25 percent, 14.25 percent, and 13.75 percent, respectively.
The decision is positive for the banking sector, enhancing the business community’s trust and economic growth.
The interest rate cut and the decline in inflation will encourage capital expenditures. This, in turn, will promote consumer spending by boosting the interest-bearing debts’ ability in light of the government funds by reducing the interest rate bill.
Moody’s Investors Service expected credit rates growth by more than 15 percent in 2020, adding the non-performing loan dropped to 4.1% of the total loans in March 2019.
Earlier in August, the Central Agency for Public Mobilisation and Statistics announced that Egypt’s annual inflation rate went down to 6.7 percent.