Will the CBE cut rates again on Thursday? Analysts and economists polled by EnterpriseAM are divided about whether the central bank will cut interest rates when its Monetary Policy Committee meets on Thursday. Four out of the 11 analysts we surveyed expect a 50-100 bps rate cut, while five see policymakers leaving rates unchanged, and the remaining two undecided, saying their decision depends on how inflation and policy priorities evolve.

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REMEMBER- The CBE cut interest rates 100 bps in its sixth meeting of the year in October, extending the easing cycle it resumed in April after a brief pause in July.

Where rates stand now: The overnight deposit rate is currently at 21.00%, the overnight lending rate at 22.00%, and the main operation and discount rates at 21.50%.

Inflation raises the odds of a hold: Last month’s inflation reading limited the central bank’s room to continue cutting rates, several analysts told EnterpriseAM. Annual urban inflation rose 0.8 percentage points in October to 12.5%, driven by higher fuel, food, and beverage prices.

In context: Al Ahly Pharos’ Hany Genena expects the CBE to keep rates unchanged this week in light of accelerating inflation. EFG Hermes’ Mohamed Abu Basha echoed this sentiment in comments to EnterpriseAM, noting that higher rents following changes to the Old Rent Law and the still-unclear impact of last month’s fuel price hike all point toward the central bank keeping rates unchanged for now.

But several analysts still see room for a cut: “Our base case for the November meeting is a 100 bps cut,” said economist and Kent Business School Advisor Ali Metwally. EG Bank board member Mohamed Abdel Aal also penciled in a 50-100 bps cut this week.

There’s more to it: “Policymakers still have room to continue the easing cycle,” Capital Economics’ James Swanston wrote in a research note seen by EnterpriseAM. The firm expects a 100 bps cut this week. The macro backdrop remains supportive of easing thanks to improving inflation dynamics, FX stability, and stronger foreign inflows amid renewed appetite for T-bills, Metwally said. Continued cuts would balance growth momentum with inflation control and help steer inflation toward the 7% (±2%) target by the end of 2026, Abdel Aal added.

Other motivations for further easing include the global trend toward looser monetary policy — including by the US Federal Reserve — which gives Egypt more room to cut without undermining foreign investment, Abdel Aal added. Lower rates would also ease the cost of borrowing, supporting investment and reducing pressure on the state budget, he said.

The CBE should keep rates unchanged, but will it? Banking expert and former chairman of Industrial Development Bank Maged Fahmy told EnterpriseAM that “technically, the central bank should at least keep rates on hold, because inflation is high and expected to rise further.” He added that headline inflation “could increase even more in the coming period,” which would normally argue against further monetary easing. Still, Fahmy said the central bank may choose to continue cutting for broader policy reasons. The US Federal Reserve “cut rates even though inflation had not fallen, saying clearly it was targeting the labor market,” he noted, adding that Egypt could follow a similar approach: “the government is targeting the budget deficit, so it is possible they continue lowering rates.”

Some see cuts, but not now: Thndr Securities’ Esraa Ahmed told us that the “current inflation levels allow room for a 100 bps cut before year-end but with rising pressures, we think the CBE could prefer to hold rates at its next meeting.”

“Although the central bank may keep rates unchanged in the November meeting, we believe there is room for a 100 bps cut to stimulate the economy and the private sector,” HC Securities’ Heba Mounir told us. She attributed this to the strength of Egypt’s external position, including the rise in net foreign reserves to a record USD 50.1 bn in October, the improvement in banks’ net foreign assets, the jump in remittances in August, the drop in Egypt’s one-year CDS spreads, and the rebound in Suez Canal revenues in November — all factors that helped the EGP strengthen nearly 8% against the USD so far this year.

Some are on the fence: Former Banque Misr Vice Chairman Sahar Al Damati expects the CBE to either hold rates or slash them by 100 bps. She told EnterpriseAM that the first scenario — a hold — reflects the impact of recent fuel price hikes on inflation. However, if the CBE opts to cut, she said it would be driven by broader economic stability, improved FX conditions following Egypt’s c. USD 30 bn agreement with Qatar to develop Alam El Roum.

AFTER THIS WEEK’S MEETING-

Most analysts expect rate cuts to continue through the final quarter of the year. Beltone Holding’s Head of Research Ahmed Hafez sees a 100-150 bps cut over the full quarter. “We are not certain about timing — it could be November or December,” he said. December’s meeting is expected to bring another 100 bps cut, followed by a cumulative 800 bps in cuts in 2026, according to Swanston. Genena sees room for a 100-200 bps cut in December, while Metwally expects an additional 50-100 bps cut if inflation remains within its current range.

Inflation outlook: Inflation is expected to continue accelerating through year-end. Capital Economics projects average inflation of 13% in 4Q. Hafez expects headline inflation to rise to 14% in November and December due to the lingering impact of fuel price hikes and a possible further VAT increase on cigarettes. Abu Basha sees inflation rising to 14.1%, then 14.3% by year-end, adding that any potential changes to rental rules could push inflation higher.

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