Egypt’s interest rate cut and easing inflation will support bank revenues, credit rating agency Moody’s told Daily News Egypt. They cited the Central Bank of Egypt’s (CBE) 1% interest rate cut as credit positive for banks.

Accordingly, as inflation is currently below the CBE’s 9% target, Moody’s forecasts further rate cuts over the next year, “which will bolster business confidence and economic growth, supporting increased credit growth and business opportunities for banks, which will outweigh pressure on their net interest margins,” the agency stated.

Lower interest rates and inflation will encourage capital spending by businesses that have been holding back on such investments, supporting consumer spending through enhanced debt affordability and government finances through a reduced interest bill.