The Central Bank of Egypt’s Monetary Policy Committee will convene on Thursday for its sixth scheduled meeting of the year to determine key borrowing and lending rates on the Egyptian pound, with financial markets widely anticipating a fifth consecutive hold.
At its previous meeting on August 20, the committee maintained the overnight deposit rate at 19 percent, the overnight lending rate at 20 percent, and both the main operation and discount rates at 19.5 percent. That decision followed identical holds on April 2, May 21, and July 9. According to the Monetary Policy Committee, keeping rates steady is designed to secure an adequately positive real interest rate, anchor inflation expectations, and support an ongoing downward trajectory toward the central bank’s target.
Policymakers have indicated that they expect inflation to begin easing more discernibly in the first quarter of 2027, eventually approaching the bank’s target band of 7 percent, ±2 percentage points, during the second half of that year. While authorities note that underlying monthly price pressures are moderating across consumer price index components, the broader outlook remains vulnerable to upside risks, including potential regional escalations and the downstream effects of domestic fiscal consolidation.
Inflation Data and Market Forecasts
Recent economic data released earlier this month showed mixed signals across consumer price metrics. The Central Bank of Egypt reported that annual core inflation climbed to 14.9 percent in August, up from 14.7 percent in July, while the core consumer price index rose 0.3 percent month-on-month following a flat reading in July. Concurrently, the Central Agency for Public Mobilisation and Statistics recorded urban headline inflation at 14.5 percent annually in August, easing from 14.9 percent the previous month, with urban headline prices inching up 0.1 percent from July.
A recent Reuters survey of twelve economists indicates that eleven anticipate the central bank will keep rates unchanged on Thursday. Mohamed Abu Basha of EFG Holding noted that while price growth is slowing, higher global oil prices heighten the risk of renewed domestic pressures. HC Securities & Investment stood as the lone surveyed outlier forecasting a one-percentage-point rate increase. Heba Mounir of HC argued that Egypt’s stable external position might not fully insulate the domestic economy from regional energy shocks, with her firm projecting acceleration in fourth-quarter inflation driven by scheduled increases in old rents and anticipated adjustments to domestic fuel prices.
Jamil Naeem of S&P Global Market Intelligence similarly pointed to persistent core inflation figures in August as a reason for the Monetary Policy Committee to remain sidelined. A separate Bloomberg poll of ten Egyptian financial institutions—including EFG Hermes, CI Capital, and Al Ahly Pharos—yielded identical expectations for a rate hold, citing global oil volatility, geopolitical tensions, and fluctuations in foreign investor inflows.
Balancing Stability and Growth
Banking expert Shaimaa Wagih noted that Thursday’s decision requires balancing the drive to suppress inflation against the need to protect the competitiveness of local assets and sustain commercial activity. Wagih emphasized that while headline inflation has receded to 14.5 percent, the persistence of core inflation at 14.9 percent demonstrates that underlying price components remain sticky, justifying a cautious posture from the central bank.
