• The Central Bank of Egypt alongside other African Central Banks are set to review interest rates due to global economic pressures.
• Egypt’s inflation rate decreased to 12.8% in February, driven by easing foreign currency shortages, possibly signaling rate cuts.
• A survey shows 88% of analysts predict Egypt will cut interest rates in April, marking the first decrease since 2020.

Central Bank of Egypt

What happened? Central banks in South Africa, Egypt, and several other African nations will pronounce on interest rates over the course of the next month. This is due to the US President Donald Trump’s protectionist policies.

“The common theme across these countries is expected to be a cautious approach to monetary policy, as central banks navigate the delicate balance between controlling inflation and fostering economic growth.”

EY Africa Chief Economist Angelika Goliger

Inflation Rates Bloomberg reports that it expects that Egypt will lower borrowing costs on April 17, 2025.  The inflation rate in Egypt decreased almost halved to 12.8% in February.The reason for this decline is that the impact of a shortage of foreign currency especially the US dollar has lessened. 

Will the interest rate decrease? Goldman Sachs Group Inc foresees that the Central Bank of Egypt (CBE) will cut its base interest rate. It is currently set at 27.25% by 300 to 400. One basis point equals 0.01%, so this would mean a reduction of between 3% and 4%.

The group even goes on to suggest that there is a chance the CBE could hold its meeting earlier than planned, signalling an urgency to support the economy. This is because reducing interest rates is a tool often used to stimulate economic activity. This is especially true when growth is slow or when there are challenges such as high inflation.

Predictions

For the first time in five years CNBC Arabia reports that the Central Bank of Egypt will cut its interest rate in its second meeting of 2025. 

The Central Bank of Egypt had previously decided to maintain interest rates for the seventh consecutive time. They set it at 27.25% for deposits and 28.25% for lending last February.

Survey Results  CNBC Arabia published the result of a survey regarding the possibility of decreasing the interest rate next Thursday. The survey included 16 analysts and experts from local and international banks and investment companies. 

The news outlet reported that 88% of participants predicted that interest rates will be cut for the first time since November 2020. 

Heba Monir, the macroeconomic analyst at HC Investment Bank, expects that the Central Bank of Egypt will cut interest rates by 1.5%. This is due to improvement in some external indicators for Egypt. This includes the rise in net foreign assets in February and the improvement in foreign currency reserves in March. 

On the other hand, 12% of those surveyed expected that the CBE will maintain interest rates for the 8th consecutive time. They expect escalating trade tensions, regional unrest, and rising fuel prices to drive this decision. Additionally, they predict that rising fuel prices will drive this decision, as they impact inflation rates and essential goods.

Mohamed El-Naggar, Head of Debt Instruments at Ner Consulting, believes that the  Central Bank will maintain interest rates unchanged. He explains that this could be due to the surge in inflation in March, rising fuel prices, and global market volatility.