Majority of analysts see Central Bank of Egypt keeping rates on hold as wartime pressures build

Will the CBE put its easing cycle on ice tomorrow? A majority of analysts and economists polled by EnterpriseAM expect the Central Bank of Egypt’s Monetary Policy Committee (MPC) to leave interest rates unchanged at its meeting on Thursday, marking a sharp shift from February’s “crisis management is over” narrative as regional tensions trigger capital outflows, EGP depreciation, and a surprise fuel price hike.

Of the 14 analysts surveyed, 11 predict a hold, while two see a potential 100 bps hike as a preemptive move against inflation, and one remains split. Not a single respondent expects the CBE to continue its easing cycle.

The supply shock dominates the outlook: Analysts broadly agree that inflationary pressures are being driven by external supply shocks rather than domestic demand, limiting the effectiveness of rate hikes. “The current inflation is resulting from factors unrelated to supply and demand for goods... it cannot be treated by raising interest rates to absorb liquidity,” former Industrial Development Bank Chairman Maged Fahmy told us, arguing that a hold would avoid a sharp policy reversal.

Real rates remain a cushion: Despite rising inflation expectations, Egypt’s high real interest rates provide room for maneuver. “The CBE already possesses a relatively comfortable margin thanks to the high real interest rate, allowing for some inflation rise without the need for an immediate response,” Thndr’s Esraa Ahmed told us.

Flexible FX changes the game: Al Ahly Pharos’ Hany Genena notes that unlike the 2022 crisis, the EGP is now moving more flexibly. “What we are witnessing currently is primarily a balance of payments shock, not an exchange rate distortion,” Genena says, adding that real interest rates remain high enough to preserve the “attractiveness of local debt instruments” without further tightening.

Anticipating a March spike: Those leaning toward tightening point to lagging inflation data, with March figures due 10 April expected to reflect the full impact of a 19% fuel price hike and the EGP’s slide to just under 55.00/USD. “The CBE must take a preemptive decision to hedge against this inflationary wave,” says veteran analyst Ehab Said, who expects a 100 bps hike. He points to the 150 bps rise in six-month T-bill yields in March as a signal that the market is already pricing in a move.

Former Banque Misr Deputy Chair Sahar El Damaty also flagged a hike as a secondary but plausible scenario B. “The MPC could take a preemptive decision to raise interest rates — perhaps by about 100 bps — if forecasts show a significant rise in inflation, especially with the increase in oil prices,” she noted, though she ultimately leans toward a hold.

The new inflation reality: Analysts have aggressively revised up their inflation outlook for 2Q 2026. Faisal Islamic Bank’s Iman Marei expects the CBE to pause to assess the triple threat of geopolitics, inflation, and fuel prices. Beltone’s Ahmed Hafez expects March’s monthly momentum to hit 3%, driving annual headline inflation to a nine-month high of 15%. HC Securities’ Heba Monir revised her 2026 average inflation forecast to 13-14% (up from 10-11%), noting that USD 4 bn in foreign outflows from the T-bill secondary market since 1 March necessitates a cautious stance. EFG Hermes chief economist Mohamed Abu Basha leads with the most pessimistic outlook, expecting inflation to sit in the 15-16% range.

Several global institutions now expect a slower easing path throughout the year, with Deutsche Bank cutting its forecast for total rate cuts in 2026 and signaling that “the CBE is likely to remain on hold through the first half of the year,” citing “upside risks to inflation and challenging external context.” Capital Economics’ Jason Tuvey echoed the view, noting that while the CBE will “tread more carefully,” a hike would only be triggered by “a sharp and sustained rise in global energy prices and/or severe pressure on the EGP.”

The easing cycle has effectively hit a wall. As economist Hany Abou El Fotouh puts it: “We are seeing a shift in CBE policy: from stimulating growth to defending the stability of the EGP and confronting the high cost of living.”