Hisham Ezz Al-Arab: The Central Bank has succeeded in stabilizing monetary policy and ending the era of surprises
Hisham Ezz Al-Arab, Chief Executive Officer of the Commercial International Bank – Egypt (CIB), stated that the period from 2015 to the end of 2022 witnessed what he described as “intense volatility”, or what is known economically as “volatility”, noting that this phase was marked by frequent surprises in monetary policy and exchange rate management.
In an interview with Al Arabiya Business on the sidelines of the IMF Annual Meetings, Ezz Al-Arab explained that excessive surprises in monetary policy are considered unhealthy from an economic perspective, as they lead institutions to adopt overly cautious hedging strategies without clearly understanding the nature of upcoming risks. This, he said, distorts the accuracy of financial models and makes them excessively conservative.
He added that this situation persisted until recently but has now begun to improve noticeably, emphasizing that the current Central Bank has succeeded in establishing the perception that its decisions are now more predictable, which he described as a very positive development.
Ezz Al-Arab noted that this shift has been reflected in the performance of the local market, as the “risk premium” previously added by traders to prices in anticipation of unexpected changes has now disappeared. He explained that, in the past, if a product cost 100 pounds, it would be sold for 140 pounds due to uncertainty; however, that premium has now vanished in sectors such as automotive and poultry, as the market has grown more confident in the Central Bank’s ability to manage risks effectively.
