The Central Bank of Egypt withdrew a record amount of surplus bank liquidity in a historic weekly tender, with the aim of controlling inflation and lowering prices.
The Central Bank of Egypt withdrew 1.050 trillion pounds from the surplus liquidity of banks operating in the country, during the weekly tender held today, Tuesday, with a return of 27.75%, according to data on the bank’s official website.
The tied deposit mechanism is one of the open market tools for managing the volume of liquidity and absorbing its surplus in the Egyptian banking system. It aims to reduce the volume of the money supply of the pound, in addition to curbing inflation.
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In this context, 32 banks submitted requests in the offers submitted at today’s tender, and all of them were accepted by the Central Bank.
This measure comes in light of the slowdown in inflation in Egyptian cities to 32.5% on an annual basis in April, compared to 33.3% in March, according to data from the Central Agency for Public Mobilization and Statistics, but it is still very far from the Central Agency’s target of between 5 and 9. %.
Economists believe that this measure comes as part of an attempt to coordinate financial and monetary policies to control inflation, and this does not mean that the Central Bank will move to reduce interest rates at its meeting next week.
They also believe that using open market operations, including weekly deposits to withdraw liquidity, reduces inflation pressures and lowers prices during the second half of this year and next year.
