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With a return of more than 20%, Egyptian banks are preparing for the battle of savings certificates

Egyptian banks are currently preparing to offer savings certificates with a return of more than 20%, after the Central Bank of Egypt decided to raise the interest rate by 3%.

The Central Bank of Egypt decided to raise interest rates on Thursday, by 3%, bringing interest rates to 16.25% and 17.25% for deposits and lending, respectively.

The managements of a number of Egyptian banks meet next Sunday to offer new savings certificates in the market with a return rate of more than 20%, at a time when a number of banks decided to raise interest rates on certificates with variable returns.

This came hours after the Central Bank of Egypt decided to raise interest rates by 3%, and the variable return certificates are linked to the Central Bank of Egypt’s deposit rate, the Corridor, with an increase of 25%.

It is enforced according to the rules from the second working day to change the deposit rate applied by the Central Bank to all bank customers.

The certificate, with a variable return, is linked to the deposit rate of the Central Bank of Egypt, the Corridor “Show Hall”, with an increase of 0.25%, and the new interest rate is applied, starting from the working day following the change in the deposit rate applied at the Central Bank of Egypt on all existing and new clients, and the return is calculated from the working day. following the date of purchase.

Certificates with a variable return allow their owner to borrow with their guarantee and issue credit cards, and they cannot be retrieved before the lapse of 6 months from the second business day to the day of purchase.

According to a source in one of the Egyptian government banks, there will be a meeting of the ALICO committee next Sunday, to discuss pricing savings vessels in banks and to set new prices for loans, deposits, and savings certificates.

He said that the bank is studying raising interest on variable certificates according to the rules, in contrast to the decision to issue savings certificates with a higher return than the current one, which is 17.25%, in light of the central bank’s decisions to raise interest rates.

He confirmed in statements to “Al-Ain news” that the bank’s ALICO committee will meet to determine the return on new savings certificates, and it will be higher than 20%, explaining that government banks will take the same action.

Hani Genena, a banking expert, commented by saying that banks offer short-term savings certificates for a year with a return of more than 20%, saying that this will attract liquidity from the market and confront inflation, expecting that the inflation rate will reach 13% by the end of next year if proper measures are taken. in terms of monetary policy.

He added that raising the interest rate reduces the domestic demand for products, and leads to lower commodity prices.

The inflation rate in Egypt, according to data from the Central Agency for Public Mobilization and Statistics, is 19.5%, and according to a statement by the Central Bank of Egypt, the Monetary Policy Committee aims to confront and contain inflation, on the demand side, so that inflation does not deviate from the target rates.

The committee confirmed that it targets downward inflation rates, targeting 7% during the fourth quarter of 2024, with an increase or decrease of 2%, and a level of 5% with a fluctuation of 2% up or down in the fourth quarter of 2026.

Dr. Mohamed Abdel-Rahim, an economist, said that raising interest rates by 3% will prompt banks to raise the rates of return on savings certificates and offer new tools to customers with a return of more than 20% during the next few days.

He added that issuing the certificates will contribute to attracting liquidity from the market and confronting inflation, thus achieving the Central Bank of Egypt’s target and dealing with high inflation rates.

According to data from the Central Bank of Egypt, inflation rates reached 21.5% last November, according to the bank’s measurements.

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