Investment Banks Expect Egypt to Cut Interest Rates by Up to 100 Basis Points at Year-End Meeting
A survey conducted by Asharq indicates that eight leading investment banks expect the Central Bank of Egypt (CBE) to cut interest rates by between 50 and 100 basis points at its final Monetary Policy Committee (MPC) meeting of 2025, scheduled for December 25.
The investment banks participating in the survey include EFG Hermes, Naeem Brokerage, Al Ahly Pharos, Mubasher Financial, Cairo Capital Securities, Arabia Online, and Thndr. The consensus reflects growing confidence that easing inflationary pressures and improved macroeconomic indicators provide room for further monetary easing.
Currently, the CBE’s overnight deposit rate stands at 21%, the overnight lending rate at 22%, and the main operation rate at 21.5%. These levels follow a cumulative 625-basis-point rate cut since the beginning of 2025, marking Egypt’s first monetary easing cycle in four and a half years.
The central bank has reduced interest rates in four steps this year after maintaining them at record highs. Cuts were implemented by 225 basis points in April, 100 basis points in May, 200 basis points in August, and a further 100 basis points in October, reflecting a clear shift toward accommodative monetary policy after years of tightening.
Diverging Views, Common Direction
Analysts surveyed largely agree on the direction of policy, though expectations differ slightly on the size of the cut. Hany Genena, Head of Research at Al Ahly Pharos, expects a 100-basis-point reduction, citing the decline in inflation recorded in November. EFG Hermes also forecasts a 100-basis-point cut, arguing that the recent fuel price adjustments are likely to have a limited impact on inflation.
At Arabia Online, Head of Research Mostafa Shafie projects a cut of between 50 and 100 basis points, supported by improving inflation readings in November and the appreciation of the Egyptian pound against the US dollar. Salma Hussein, Head of Research at Naeem Brokerage, anticipates a more cautious 50-basis-point cut, pointing to inflation coming in below expectations and the US Federal Reserve’s move toward lower interest rates.
Mubasher Financial’s Head of Research, Ahmed Abdel Nabi, expects a 100-basis-point reduction, driven by the US rate cut and a slowdown in domestic inflation. Similar expectations were voiced by Amr El-Alfy, Head of Equity Strategies at Thndr, and Ahmed Abu Hussein of Cairo Capital Securities, both of whom cited the noticeable retreat in inflation as a key driver.
Inflation, Currency, and Policy Outlook
Inflation in Egypt’s urban areas continued to ease in November, with annual consumer price inflation falling to 12.3%, compared to 12.5% in October, according to data from the Central Agency for Public Mobilization and Statistics (CAPMAS). On a monthly basis, inflation slowed sharply to 0.3%, down from 1.8% in the previous month, reinforcing expectations of further monetary easing.
The Egyptian pound has also shown a marked improvement over the past five months, reaching its strongest level in more than a year. The currency has been supported by robust foreign currency inflows, particularly from tourism revenues as the peak travel season and summer holidays gained momentum.
Egypt’s real interest rate—calculated as the nominal policy rate minus inflation—is currently estimated at around 8.5%, one of the highest among emerging markets, according to analysts. This elevated real rate further strengthens the case for additional cuts without jeopardizing price stability.
Looking Ahead
The MPC’s December 25 meeting will be the eighth and final policy meeting of 2025. Between March 2022 and March 2024, the CBE raised interest rates by a cumulative 1,900 basis points to rein in soaring inflation before pivoting toward easing earlier this year.
The central bank is targeting an average inflation rate of 5% to 9% by the fourth quarter of 2026, and 3% to 7% by the fourth quarter of 2028. Analysts believe that continued moderation in inflation, coupled with currency stability, could allow the CBE to remain on an easing path into 2026, albeit at a measured pace.