Analysts Expect Central Bank of Egypt to Keep Interest Rates Unchanged at 19% on Thursday
Analysts at five investment banks expect the Central Bank of Egypt to keep interest rates at 19% on Thursday, citing the freeze on fuel prices and a real interest rate margin of nearly 5.1 percentage points.
Economists at several investment banks expect the Central Bank of Egypt to keep interest rates unchanged at Thursday's Monetary Policy Committee meeting, according to Enterprise. The overnight deposit rate currently stands at 19%.
Analysts point out that the government's freeze on fuel prices until December limits inflationary pressure for now. Annual urban inflation reached 13.9% in September, leaving a real interest rate margin of around 5.1 percentage points, according to the source.
Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes, said the decision to freeze fuel prices "will keep inflation under control," adding that the weakening pound could add pressure, but it is still early given ongoing volatility and geopolitical risks. CI Capital, HC, Al Ahly Pharos, and Deutsche Bank also expect rates to be held at 19%. Foreign reserves stood at $57.35 billion at the end of September. Deutsche Bank raised its average inflation forecast for the end of 2026 to 15.7% from 14.7%, expecting a 10% to 15% fuel price hike to be delayed until the first quarter of 2027.
Conversely, Maged Fahmy, former chairman of the Industrial Development Bank, believes the central bank might raise interest rates on Thursday to curb hot money outflows and maintain the attractiveness of domestic debt. The US dollar had crossed 55 EGP, and foreign and regional investors recorded net sales of $1.13 billion in local debt between Monday and Wednesday of last week.
What Do These Terms Mean?
Interest Rate: The percentage paid by a borrower or received by a depositor, set by the Central Bank of Egypt through the Monetary Policy Committee.
Real Interest Rate Margin: The difference between the interest rate and the inflation rate, used to measure the attractiveness of returns after accounting for price increases.
Hot Money: Short-term foreign investments in debt instruments that move quickly between countries in search of the highest yield.
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