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The Central Bank of Egypt (CBE) has room for another 500-600 basis points of rate cuts this year, Deutsche Bank (DB) says in a new research note seen by EnterpriseAM — but, if fiscal reforms pick up pace or global conditions turn sour, the central bank may turn more hawkish.
Why it matters: The call (just) puts DB at the more dovish end of expectations for the CBE’s 2026 trajectory. Some 725 bps of cumulative cuts last year brought the policy rate to 20%, and the bulge bracket bank sees rates falling to the 14-15% range by the end of this year while keeping real rates in positive territory.
Look for the CBE to go for another 100 bps cut at its 12 February meeting, DB economist Samira Kalla writes. The timing matters: The meeting falls before Ramadan begins on 18 February, and seasonal imports are already in stock. That could give the central bank a window to ease before any seasonal price pressures kick in. Inflation was steady at 12.3% y-o-y in December, and the bank forecasts an average of around 11% for 2026 — still above the CBE’s target of 7% (± 2 percentage points) by 4Q, but on a clear downward trend.
Deutsche Bank sees the economy growing at a 5% clip in 2026-27, in line with the CBE’s forecast.
Look for manufacturing to be the star once again: The manufacturing sector grew 15% in the first quarter of last year, Kalla writes. Regular readers of EnterpriseAM will have seen a flood of inbound investment in manufacturing, buoyed by improvements in everything from the macro climate to the customs bureaucracy. Standouts include motor vehicles (+50%), furniture (+34%), pharma (+19%), and ready-made garments (+17%). Outside of manufacturing, ICT added 14.5%, tourism 13.8%, and financial services 10.2%.
Also in the mix: The Suez Canal has finally returned to growth. Meanwhile, hydrocarbons remain a drag, but the decline is slowing as activity resumes and new gas field discoveries come online.
On inflation risks, DB flags potential FX pass-through from capital outflows, pending hikes in electricity and tobacco prices, and food price volatility thanks to (you guessed it) climate change. Lower-than-expected food price increases and any delay in phasing out energy subsidies could help push inflation lower than forecast.
