Analysts expect CBE to keep interest rates steady on Thursday

The Central Bank of Egypt will likely keep interest rates on hold for the second consecutive time when its Monetary Policy Committee (MPC) meets this Thursday, according to 10 analysts and economists polled by EnterpriseAM. Experts suggest that the CBE is taking a “wait-and-see” approach, noting the need to keep inflation expectations anchored amid elevated global energy prices and geopolitical uncertainty.

Overall, inflation is cooling, but not enough: Nine out of the 10 participants expect the CBE to maintain rates at 19% on deposits and 20% on lending. The consensus is that while price pressures eased last month, inflation remains almost double the CBE’s 7% (±2%) target, so there’s little justification for resuming the easing cycle that was paused in April.

Annual urban inflation eased 0.3 percentage points to 14.9% y-o-y in April — the first decline in three months and a full point below the 15.9% consensus from 14 analysts polled by Reuters.

“Inflation rates, while reasonable, are still shadowed by high uncertainty,” EFG Hermes chief economist Mohamed Abu Basha says, expecting the CBE to stick to its cautionary stance. CI Capital and economist Ahmed Shawky also anticipate a hold scenario until there is further confirmation of a sustainable path to disinflation.

The CBE recently raised its headline inflation target to an average of 16-17% in 2026 — well above the 11% projected in the 4Q 2025 report — and 12-13% in 2027. According to the latest Monetary Policy Report, inflation will stay above the 7% (±2%) target range through 4Q 2026, and single-digit readings are no longer expected before 2H 2027.

The ramifications of regional war continue. “There are also expectations that the strait [of Hormuz] crisis will create additional pressure on the prices of plastics and a wide range of raw materials and input,” Thndr’s Esraa Ahmed tells EnterpriseAM. She attributes the April dip to a peak in poultry prices in previous months, and warns: “The risks are still high. The CBE’s recent quarterly report revised inflation forecasts upward… In this climate, I don't see them considering a cut anytime soon.”

No case for a hike: “The case for a preemptive policy rate hike is weak as downward pressures on the EGP are easing,” Al Ahly Pharos’ Hany Genena tells us. He notes that the probability of a US-Iran agreement has increased since the ceasefire entered into force and that a “high real rate buffer of around 5% provides the MPC with ample room for a wait-and-see approach.”

Quiet seas, for now. London-based economist Ali Metwally lays out three scenarios but sees “stability” as the baseline. “The logical move is to wait for inflation to hit the 11-12% mark in 3Q or 4Q before considering a gradual 1-3% cut,” he says. However, he warns of a “contingency plan” where the CBE might be forced to hike rates — not just hold them — if a fresh geopolitical shock hits the EGP or energy prices again.

And oil remains a problem. “The Fuel Automatic Pricing Committee will likely approve a 10% increase in diesel and gasoline prices in late May/June due to the q-o-q surge in average Brent expressed in EGP terms by nearly 40%,” Genena says. Beltone Holding’s Ahmed Hafez agrees: “With the Middle East conflict still weighing heavily on energy and some commodity prices, we believe risks are skewed to the upside.”

The outlier: Ehab Said is the only analyst in our poll to suggest a potential move upward. While he believes a “hold” is the most likely outcome, he argues that a 1% hike would be the “correct” decision. “The announced inflation figures do not reflect reality; actual inflation has exceeded 20%,” Said claims. He expects inflation to exceed 15% in May following recent hikes in telecommunication prices.