CBE leaves interest rates unchanged: The Central Bank of Egypt (CBE) decided to leave interest rates unchanged in its fourth meeting of the year on Thursday, the bank said in a statement. The move marks a halt in the Monetary Policy Committee’s (MPC) easing cycle, after it cut rates by 225 bps in April and 100 bps in May.

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Where rates currently stand: The overnight deposit rate now stands at 24.00%, the overnight lending rate at 25.00%, and the main operation and disc. rates at 24.50%.

The why: The MPC said that the current level of interest rates is appropriate to keep inflation on a downward path and maintain a tight enough monetary stance to anchor inflation expectations. “A wait-and-see approach is required before proceeding further with the monetary easing cycle,” the committee said, pointing to the need for more time to assess the impact of recently announced fiscal and tax reforms — including VAT amendments that will impact the price of cigarettes, among other things.

REMEMBER- Annual headline urban inflation fell to 14.9% in June, down from 16.8% in May, ending a three-month upward trend. Monthly inflation fell by 0.1% compared to an increase of 1.9% in the previous month.

Most saw this coming: Economists and analysts we polled last week saw this coming, with most having expected the MPC to pause its easing cycle. “The decision to hold rates was expected given the timing of the meeting, which coincides with the start of the new fiscal year, its budget, and its associated fiscal tightening measures,” Al Ahly Pharos Head of Research Hany Genena told EnterpriseAM. “We expect the central bank to resume monetary easing at its August meeting, potentially cutting rates by up to 200 bps,” Genena said, citing expectations for a Fed rate cut in September and the anticipated completion of Egypt’s pending IMF reviews.

And some didn’t: The decision came as a surprise to JP Morgan, which had forecast a 100 bps cut on the back of the downside inflation surprise in June, the firm said in a note seen by EnterpriseAM. JP Morgan now expects the CBE to hold rates again when the MPC meets in August. “We still look for a further 300bp of cumulative easing before the end of 2025, with cuts resuming in October,” the firm said, explaining that “a move lower [is] needed to be seen at least in August inflation for the CBE to consider resuming easing.”

What analysts are saying: Analysts welcomed the central bank’s decision, saying it reflects a balanced approach. “The market is still digesting the 325 bps in cuts delivered earlier this year, and the hold sends a reassuring message that monetary policy remains balanced,” economist Hany Abou El Fotouh told EnterpriseAM. He said the decision supports EGP stability and investor sentiment and reflects a “measured approach by the CBE to balance inflation control and growth.” He sees a potential cumulative cut of 400-600 bps by year-end. CI Capital’s Sara Saada echoed Abou El Fotouh’s remarks and told us there’s scope for 200-300 bps in further cuts later this year, “provided disinflation proves sustainable.”

What’s next? The MPC said it will continue to assess its policy decisions “on a meeting-by-meeting basis,” taking into account the inflation outlook and balance of risks. It expects annual headline inflation to stabilize around current levels for the rest of 2025 before gradually declining in 2026. The committee reaffirmed it “will not hesitate to utilize all tools at its disposal” to achieve its price stability mandate and steer inflation toward its 7% (±2 percentage points) target by 4Q 2026.

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