Standard Chartered's Bader Al Sarraf has revised expectations for Egypt's monetary policy, now forecasting that the Central Bank of Egypt (CBE) will maintain policy rates at 19% through the fiscal year ending June 2026, delaying previously anticipated near-term easing [1]. The bank continues to project a policy rate of 13% by the end of 2026, contingent on stabilizing economic conditions [1].
The delay in easing is attributed to a rebound in inflation, recent fuel price hikes, and portfolio outflows, all of which are tightening financial conditions in Egypt [1]. These factors are expected to increase transportation and production costs in the coming months, raising the risk of further upside inflation surprises [1].
The Egyptian pound (EGP) has come under renewed pressure, with the USD/EGP exchange rate recently trading near record official-market lows around 53, reinforcing the need for policy caution [1]. Despite these challenges, stronger FX liquidity and net foreign assets are seen as supportive factors that could help stabilize the FX market and absorb portfolio outflows [1].
Standard Chartered maintains that the easing cycle is likely to resume in the second half of calendar year 2026, provided that financial conditions stabilize [1].
CONCLUSION
Egypt's central bank is expected to keep policy rates elevated at 19% through FY26 due to rising inflation and currency pressures, delaying any rate cuts. Standard Chartered anticipates easing to resume later in 2026 if conditions improve, with a policy rate target of 13% by year-end. The market remains cautious amid inflation risks and EGP weakness.