The Central Bank of Egypt (CBE) forecasts that annual headline inflation will remain steady throughout the rest of 2025, with a gradual decline projected in 2026. This comes after the Monetary Policy Committee (MPC) decided to maintain current interest rates in its latest meeting last Thursday, amidst a backdrop of global economic uncertainties.
The decision to hold the deposit, lending, credit, and discount rates at 24%, 25%, and 24.5% respectively, follows rate cuts of 2.25% in April and 1% in May. The MPC identified fluctuating trade policies and potential geopolitical tensions as key influences in maintaining a cautious monetary stance.
Globally, weakened growth prospects have led central banks to adopt more cautious approaches. The MPC emphasized the volatility in international commodity prices, particularly oil, which are influenced by changing supply dynamics and weakened global demand forecasts. Conversely, prices for basic agricultural commodities have seen slight declines, aided by seasonal factors.
Domestically, Egypt’s inflation rate eased to 14.4% in June, down from 16.5% in May, as reported by the Central Agency for Public Mobilization and Statistics (CAPMAS). While this represents a moderation, ongoing pressures persist in sectors such as food, beverages, and utilities, which saw significant price increases.
The CBE reported a notable increase in total liquidity within the banking sector, reaching EGP 12.821 trillion in May—a monthly rise of approximately EGP 137 billion. The money supply also expanded to EGP 3.285 trillion, with currency circulation outside the banking system rising to EGP 1.355 trillion.
The CBE’s report highlighted a rise in non-government deposits denominated in local currency, which increased to EGP 8.432 trillion in May. This trend reflects a growing inclination towards savings accumulation amid broader economic uncertainties.
Time deposits and savings certificates in local currency also saw an uptick, underscoring continued consumer confidence in the domestic banking system.
