Egypt: CBE Review: Tighter stance for longer

Research evidence excerpt

Egypt: CBE Review: Tighter stance for longer

Update

May 21, 2026 08:37 PM GMT

Morgan Stanley & Co. International plc+MEgypt | Europe Yomna Moheieldin

Economist

CBE Review: Tighter stance for Yomna.Moheieldin@morganstanley.comArnav Gupta +44 20 7677-0771

Strategist

Arnav.Gupta@morganstanley.com +44 20 7677-0382

longer Georgi Deyanov

Georgi.Deyanov@morganstanley.com +44 20 7425-7006

The CBE kept its rates on hold, in line with our call and

consensus. We maintain our base case for unchanged rates Exhibit 2 : We continue to expect a rate hold

throughout 2026. In strategy, we continue to be cautious and until the end of the year in our base case

prefer to pay NDF curve on the dips. 40 MS Forecast

35 Policy rate, %

Headline CPI, %Y

Economics | on Hold: The CBE kept its key policy rate stable for the second 30

Target band 25

consecutive MPC meeting since the start of the Middle East conflict, in line with our 20

call and consensus. Since the April MPC, March inflation came out with a positive 15

surprise at 15.9%, followed by a downside surprise in April with 14.9% headline 5

inflation. We expect inflation to soften again in May on the back of favorable base 0 2020 2021 2022 2023 2024 2025 2026 2027

effects, before accelerating again for the rest of 2Q26 and 3Q26 as secondary round

Source: Haver Analytics, Morgan Stanley Research Forecast

effects of energy prices hikes and EGP depreciation continue.

Forward guidance signals a cautious stance amid an unfavorable external

environment: The committee communicated that it expects inflation to accelerate

in 3Q26, driven by unfavorable base effects and geopolitically driven supply-side

pressures stemming from FX dynamics and fiscal consolidation. It also

acknowledges that inflation will exceed the 4Q26 target, while emphasizing the