Six banks have introduced new saving certificates over the past two weeks, offering high fixed yields in a move that has prompted questions over a possible interest rate hike at the next meeting of the Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC).
Aya Zoheir, deputy head of research at Zilla Capital, said the new certificates were issued to control inflation and absorb excess liquidity in the market until the maturity of all the 27 per cent certificates that have been coming due since January.
In January 2024, the National Bank of Egypt (NBE) and Banque Misr introduced one-year savings certificates offering annual returns of 23.5 per cent paid monthly and 27 per cent annually. The certificates were renewed for another year at the beginning of 2025, with maturities beginning in January 2026.
Since the outbreak of the US-Israeli war on Iran on 28 February, the Egyptian pound has witnessed a sharp decline against the dollar. The maturity of the savings certificates has also released substantial liquidity into the market, encouraging people to buy dollars in an attempt to preserve the value of their savings.
The NBE and Banque Misr, the two largest state-owned banks, have raised returns on three-year fixed-interest certificates of deposit by 1.25 per cent to 17.25 per cent. The two banks together dominate the sector, holding around half of all the deposits in the banking system.
Successive governments have traditionally relied on these institutions as key levers of monetary policy.
Similarly, Banque du Caire and MID Bank (formerly Misr Iran Development Bank) introduced certificates with competitive returns in an effort to maintain their existing customer base and attract liquidity from the market.
The Commercial International Bank (CIB), the largest private-sector bank, raised its return to 17.5 per cent, surpassing its private-sector competitors and offering the highest interest rate on three-year savings certificates.
Crédit Agricole introduced its Prestige fixed-return certificate, offering a fixed annual yield of 17.25 per cent paid monthly, with a minimum issuance value of LE1 million.
Banking expert Hani Abul-Fotouh said the new issuances by Banque du Caire and the CIB are not routine banking measures but instead are a form of pre-emptive monetary mobilisation.
The objective, he argued, is to absorb excess liquidity from the market before it turns into fuel for a new inflationary wave that could further erode purchasing power.
Abul-Fotouh added that raising interest rates was a “bitter remedy” imposed in order to compensate for the depreciation of the Egyptian pound against the dollar. But he stressed that the real challenge remains unresolved, as inflation is unlikely to ease so long as the Purchasing Managers Index (PMI) remains at 46.6 points, reflecting continued contraction in non-oil private-sector activity.
He noted that the new certificates are an attempt to keep liquidity within the banking system in local currency and prevent it from shifting towards foreign currencies.
Egypt’s inflation rate slowed slightly in April following a sharp increase in March as a result of the war on Iran and the rise in energy costs.
Annual urban inflation in Egypt was 14.9 per cent in April, down from 15.2 per cent in March, due to slower price increases in the transport and healthcare sectors, the Central Agency for Public Mobilisation and Statistics (CAPMAS) said on 6 May.
On a monthly basis, inflation also slowed to 1.1 per cent in April, down from 3.2 per cent in March.
“Restricting liquidity in the market by maintaining interest rates unchanged while raising returns on savings certificates at the state-owned banks has contributed to containing potential inflationary pressures that could have emerged from excess liquidity,” Zoheir said.
Mohamed Hassan, managing director of Alpha Financial Investments Management, ruled out the possibility that the moves indicate that the CBE intends to raise interest rates at the upcoming MPC meeting.
He argued that the banks’ decisions to increase returns are meant to absorb liquidity under CBE guidance, particularly in the light of the maturities of certificates issued by the NBE and Banque Misr, alongside stable gold prices and mounting fears of people turning to dollars.
Hassan believes that any move by the CBE to raise interest rates, unlikely in his view, would have a negative impact on the economy by increasing costs for companies, driving prices higher, and consequently pushing inflation to higher levels.
He said that the CBE is likely to maintain its cautious approach and keep interest rates unchanged until it becomes clearer how geopolitical tensions will evolve.
According to Hassan, developments over the past two weeks have amounted to skirmishes rather than the direct military exchanges witnessed during the early stages of the war.
He added that the political and military trajectory of events in the coming period will ultimately determine the CBE’s direction.
The business community is now waiting for the CBE’s next meeting on 21 May. At its most recent meeting, the MPC decided to keep interest rates unchanged at 19 per cent for both deposits and lending.
Business expectations had previously pointed towards interest rate cuts of between six and eight per cent during the current year amid easing inflationary pressures. However, the US war on Iran slowed this trajectory, prompting the CBE to maintain rates unchanged at its last meeting.
The CBE reduced interest rates by 100 basis points at the first MPC meeting of 2026 in the sixth cut in the past 10 months, bringing the deposit rate to 19 per cent, the lending rate to 20 per cent, and the CBE’s main operations rate to 19.5 per cent.
* A version of this article appears in print in the 14 May, 2026 edition of Al-Ahram Weekly.
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