The Central Bank of Egypt is out with its 3Q Monetary Policy Report (pdf), which highlights main trends in the country’s economic trajectory and offers insights and predictions regarding the country’s economic outlook.

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SETTING THE SCENE- The CBE cut rate by 100 bps last month in its sixth meeting of the year, continuing the easing cycle it resumed in August after a brief pause in July. The decision came as a result of the CBE’s updated outlook on inflation on the back of decelerating annual headline and core inflation.

Annual headline inflation reached an average of 12.5% in 3Q 2025, down from 15.2% in 2Q 2025, “driven mainly by a strong decline in food inflation that reverted to its pre-2022 levels.” Meanwhile, annual core inflation — which excludes volatile items like food and fuel — fell to an average 11.2% during the quarter, down from 11.6% in 2Q 2025.

ICYMI- Annual headline urban inflation fell for the fourth consecutive month in September to 11.7%, down by 0.3 percentage points from August. The dip marked the lowest annual figure since March 2022.

Inflation outlook: The CBE revised its inflation forecast downwards “given the lower-than-expected print in 3Q 2025.” The revised downward its baseline annual headline inflation forecasts from its 2Q 2025 report, now seeing inflation averaging 14% in 2025, and 10.5% in 2026. The figures are well below the 28.3% inflation average of 2024.

“The disinflation path remains constrained by: the impact of planned fiscal consolidation measures across the forecast horizon such as energy , tobacco, and electricity, and the expected persistence of annual non-food inflation,” the report read. Re-escalating geopolitical tensions could also push inflation high. Taking these scenarios into account, annual headline inflation is expected to average 14.5% in 2025 and 11% in 2026.

Medium-term projections remain unchanged: The CBE still sees GDP growth reaching an average of 4.8% this fiscal year and 5.1% in FY 2026-2027.

Our external position remained strong supported by a narrowed current account deficit. Egypt’s current account deficit stood at USD 15.4 bn in FY 2024-2025, down 25.9% y-o-y. The improvement is supported by “a surge in workers’ remittances, alongside higher services revenue, in particular from tourism and transportation.”

Money supply dynamics: M2 growth continued to slow during 3Q 2025, averaging 22.6% compared to an average of 24.2% recorded in 2Q 2025. The real growth of local currency loans to the private sector continued to grow for the eighth consecutive quarter, averaging 14.5% in 3Q 2025 compared to 12.6% in 2Q.

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