The central bank has increased the interest rates by 800 basis points (bps) since the beginning of 2024, raising the overnight deposit rate, overnight lending rate, and the rate of main operations to 27.25 percent, 28.25 percent, and 27.75 percent, respectively.

The CBE's Monetary Policy Committee (MPC) has kept the rates unchanged during the past three meetings (in May, July, and September) since they hiked the rates by 600 bps in March.

Thursday's meeting will be the sixth for the MPC this year, and it will hold two other meetings on 21 November and 26 December.

The CBE will likely maintain current interest rates amid high inflation, banking expert Walid Adel forecasted.

Adel explained that high interest rates deter investors from taking out loans to expand production. Instead, many will likely prefer depositing their funds in banks to take advantage of attractive interest rates and to limit their exposure to market risks.

However, Vice President of Investment Banking Omar Badreddin has downplayed the impact, saying it will have "minimal effect" on the Egyptian economy.

Future outlook, conditions for rate changes
 

Moreover, HC Securities & Investment and Fitch Solutions Company forecasted that the CBE will keep the interest rates unchanged.

The CBE will start easing monetary policy in 2025, and the interest rate will decrease by 1200 bps to reach 16.25 percent by the end of 2025, Fitch expected.

Nevertheless, Badreddin anticipated that the CBE would decrease interest rates by two percent by the beginning of 2025.

"A decrease in interest rates could stimulate borrowing and boost productivity. However, this is unlikely before 2025 due to ongoing geopolitical tensions in the region," Adel affirmed.

He outlined three key conditions necessary for the CBE to consider lowering interest rates: a decrease in interest rates by the Federal Reserve by 0.5 percent in each of its next two meetings, reduced geopolitical tensions in the region, and a decline in inflation rates to below the 20 percent level.

Globally, the US Federal Reserve recently cut its interest rate by half a percent; central banks in the Gulf region have opted for reductions ranging from 25 to 50 bps. In contrast, the UK has decided to keep its rates unchanged.

Current inflation trends
 

“Regarding inflation, we expect the headline inflation to accelerate by 1.0 percent MoM to 26.5 percent YoY in October due to the electricity price increases to the household, retail, and industrial sectors in September,” stated the Head of Equity Research at HC Securities & Investment Nemat Choucri.

Badreddin told Ahram Online that Egypt's main target is to reduce inflation more than its focus on decreasing interest rates.

Prime Minister Mostafa Madbouly said Egypt targets reducing the inflation rate to less than 10 percent by the end of 2025.

Egypt’s annual headline inflation rose to 26 percent in September, up from 25.6 percent in August, while core inflation slightly declined to 25 percent in September, down from 25.1 percent in August.

However, Madbouly said the government might not reach the targeted level of inflation in the short term due to the ongoing turmoil in the region.

"Egypt's inflation rate may not fall as fast as expected," Madbouly declared.