The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) is set to hold its fourth scheduled meeting of the year on Thursday to decide the future of the central bank’s key policy rates, which serve as a key indicator of the short-term direction of interest rates on the Egyptian pound. Market expectations strongly favour a third consecutive decision to leave rates unchanged.
MPC to Maintain Rates Amid Inflation Stability
The CBE warned that the inflation outlook remains subject to upside risks, including the possibility of a prolonged conflict and stronger-than-expected effects from fiscal adjustment measures.
Mohamed Abdel Aal, a prominent banking expert, said that while most domestic indicators appear, at first glance, to support the start of monetary easing, a comprehensive professional assessment clearly points towards another decision to leave interest rates unchanged. He cited the Egyptian pound’s recent stability—trading below EGP 49 to the dollar—as a positive signal, alongside improved stock market performance and anticipated European Union financing of €1.5 billion. However, Abdel Aal cautioned that inflation, though declining, remains above levels that would justify an immediate rate cut. He highlighted that global central banks, including the U.S. Federal Reserve, remain vigilant against inflationary pressures, while rising oil prices and geopolitical risks continue to pose challenges.
Economist Cautions on Rate Cuts Despite Stability Signals
Abdel Aal said the move by the Commercial International Bank (CIB) to raise its three-year fixed-rate savings certificate to 18% should not be interpreted as a signal that an interest rate cut is imminent, but rather as a clear banking sector hedge against interest rates remaining elevated for a longer period, or at least against the likelihood of a significant near-term reduction. He emphasized that the MPC is likely awaiting three conditions before resuming rate cuts: sustained declines in both headline and core inflation, continued foreign exchange market stability, and reduced global risks. “This pause is not a rejection of monetary easing but a deliberate postponement,” he said.
CIB’s 18% Savings Rate Signals Caution, Not Easing
Banking expert Shaimaa Wagih said the upcoming MPC meeting is among the most important of 2026—not merely because it will determine interest rates, but because it comes at a stage when the Egyptian economy is transitioning from managing economic pressures to managing monetary and financial stability. She noted that the central bank’s focus has evolved from combating inflation to preserving achieved stability, with decisions now informed by a broader set of indicators, including foreign currency liquidity, investment inflows, and global economic conditions. “The current phase demands a nuanced approach,” she said, adding that the MPC’s priority is to ensure the sustainability of disinflation before initiating a rate-cutting cycle.
Analyst Highlights Shift to Long-Term Stability Over Immediate Cuts
Wagih said recent improvements in the foreign exchange market have enhanced the flexibility of monetary policy by stabilising the exchange rate, improving banks’ ability to provide foreign currency, and increasing confidence in the Egyptian economy. She noted that despite the marked decline in inflation, the central bank continues to treat the indicator cautiously, as its objective is not merely to record lower inflation readings but to ensure that the downward trend remains sustainable. She estimated a 70% probability of rates remaining unchanged, with a 30% chance of a limited cut of no more than 50 basis points if disinflation trends solidify.
CBE keeps interest rates unchanged
Foreign Exchange Gains Provide CBE Flexibility
HC Securities & Investment’s research department echoed this outlook, citing regional geopolitical tensions and Egypt’s stable external position as factors influencing the MPC’s decision. Heba Mounir, the firm’s macroeconomics analyst, noted that Egypt’s flexible exchange rate has enabled the economy to absorb the impact of regional geopolitical tensions relatively well so far, but lingering risks necessitate caution. She projected a sideways trend in inflation, reinforcing the case for maintaining rates.
Separately, economists surveyed by Reuters confirmed expectations of unchanged overnight rates, with 13 respondents unanimously predicting no change to the 19% deposit rate and 20% lending rate. Some analysts suggested that the Central Bank could instead lower the reserve requirement ratio.
Economists Agree on Unchanged Rates, Reserve Ratio Speculation
The MPC’s decision on Thursday will not only shape short-term monetary conditions but also signal the central bank’s approach to balancing inflation control with economic growth. As Egypt navigates a complex landscape of domestic and global challenges, the committee’s actions will remain closely watched for their implications on market confidence and long-term stability.
MPC’s Thursday Decision Balances Growth and Inflation Control
Omar El Sayed is Archyde’s World Editor, focused on international affairs, diplomacy, conflict, and cross-border political developments. He brings a global newsroom perspective to complex events and helps readers understand how regional stories connect to wider geopolitical shifts.
