Standard Chartered’s Bader Al Sarraf now expects the Central Bank of Egypt to keep policy rates at 19% through FY26, postponing earlier plans for near-term easing. The bank still forecasts a 13% policy rate by end-2026, assuming conditions stabilise. Rising inflation, fuel price hikes and portfolio outflows are tightening financial conditions, although stronger FX liquidity and net foreign assets should help stabilise the FX market.

CBE seen on extended policy pause

"We now expect the Central Bank of Egypt (CBE) to hold policy rates at 19% for the remainder of FY26 (year ending June), versus our prior expectation of additional near-term easing."

"However, we maintain our end-2026 policy rate forecast of 13%, implying that easing is more likely to resume in the second half of the calendar year once conditions stabilise."

"These increases are likely to feed through to transportation and production costs over the coming months, raising the risk of further upside inflation surprises."

"This has contributed to renewed pressure on the EGP; USD/EGP recently traded near record official-market lows around 53, reinforcing the case for policy caution."

"This will likely help absorb portfolio outflows and stabilise FX conditions, supporting our view that the easing cycle will resume later in 2026."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)