(MENAFN – Daily News Egypt) The Assets and Liabilities Committees (ALCOs) responsible for setting interest rates at banks, will begin holding meetings this week to discuss the fate of interest on each bank’s savings and loan products. The meetings will take place in light of the Central Bank of Egypt’s (CBE) decision to cut interest rate.

The CBE’s Monetary Policy Committee (MPC) decided at its last meeting, on Thursday evening, to reduce basic interest rates by 0.5%. Egypt’s interest rates now stand at 8.25% for deposits, 9.25% for lending, and 8.75% for the credit and debit rates and the main operation at the CBE.

In the first reaction to the committee’s decision, the interest rates on variable-return certificates and some loan products linked to their pricing were automatically reduced.

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

The market’s attention is on the National Bank of Egypt (NBE) and Banque Misr, holders of the largest share of deposits and loans in the Egyptian banking sector, to find out the movement of returns in the two banks. This particularly concerns the Platinum Certificate issued by the NBE and the Al Qimma Certificate issued by Banque Misr, which are currently the two most popular certificates in the market after the recent end of the 15% savings certificates.

The two certificates grant interest of 12% for the monthly return, and 12.25% for the quarterly return.

Hisham Okasha, Chairperson of the NBE, said in a statement on Friday that the bank will not reduce the interest rates on the Platinum Certificate, despite the CBE’s interest cut.

Meanwhile, the Egypt Post decided, a few hours before the CBE decision, to reduce the interest rate on its saving accounts to 7.75%, instead of 8.5%.

Egypt Post Chairperson Sherif Farouk explained that reducing interest on saving accounts reduces project financing costs, which greatly contributes to improving economic indicators and increasing investment, and thus drives development and helps maximise economic indicators.

In the same context, the market is awaiting the launch of the first bids for Treasury bills (T-bills) and bonds after the 0.5% interest rate cut. This would reveal the impact of the decision on the return of those instruments.

On Sunday and Monday, the CBE will issue five tenders for T-bills and bonds worth a total of EGP 31bn on behalf of the Ministry of Finance. These comprise EGP 8.5bn in 91-day T-bills, EGP 10.5bn in 266-day T-bills, and EGP 2.5bn in bonds for two years, alongside EGP 5bn in 5-year bonds, and EGP 3.5bn in 10-year bonds.

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