CBE Preview: Continue to Hold

Research evidence excerpt

CBE Preview: Continue to Hold

Idea

July 2, 2026 02:46 PM GMT

Morgan Stanley & Co. International plcMEgypt | EEMEA Yomna Moheieldin

Economist

CBE Preview: Continue to Hold Yomna.Moheieldin@morganstanley.com +44 20 7677-0771

Exhibit 1 : We expect CBE to remain on hold

We expect the CBE to keep rates on hold at 19%, despite the until year-end

recent EGP appreciation and decrease in geopolitical risks. 40 MS Forecast

Policy rate, %

30 Headline CPI, %Y

Economics | We expect the CBE to remain on hold at its July meeting, despite an Target band

improving external backdrop and inflation downside surprise: We expect the CBE 20

to stay on its cautious path with a hold at its upcoming meeting. Since the last MPC, 10

the announcement of a 60-day peace deal has eased regional risk premia, and 0

inflows have strongly returned, given Egypt's status as a popular de-escalation 2020 2021 2022 2023 2024 2025 2026 2027

Source: Central Bank of Egypt, Haver Analytics, Morgan Stanley Research

trade. Strong portfolio inflows supported the currency, with the EGP appreciating forecasts

~5% since the last MPC. In our Mid-Year outlook, we expected inflation in Egypt to

re-accelerate to 15-17% and to peak in 3Q26 on second round effects from March

energy hikes, FX pass-through, and unfavourable base effects from low 3Q25

inflation.

Our inflation forecast for FY27 stands above market consensus but below

authorities' guidance: We continue to expect FY27 inflation to average 13% vs the

10% Bloomberg median. We are slightly more optimistic than the CBE's latest

Monetary Policy Report, which revised its CY2026 average inflation forecast up to

16-17% from 11% in its 4Q26 report. While the CBE sees inflation peaking in 3Q26

around 19-20%, ours peaks in 3Q26 at 17-18%, based on our view that the two-way