CAIRO –20 July 2025: Deutsche Bank released a report forecasting inflation rates in Egypt to range between 15% and 16% by the end of 2025, predicting the Central Bank of Egypt (CBE) to lower interest rates by 4% over the remainder of the year, including a possible 2% cut in August.
The report affirmed that the August cut is conditional on inflation stabilizing, especially given the upside risks associated with fiscal consolidation measures.
Moreover, the report highlighted that the structural reforms carried out by the Egyptian government ensure high growth rates for the economy and provide the CBE with comfortable room to manage interest rates.
It pointed out that interest rates management is of particular importance, given the temporary upward inflationary pressures associated with the ongoing fiscal adjustment process under the International Monetary Fund (IMF) program, which demands increases in fuel prices, tax reforms, and raising the minimum wage.
According to the report, there are upside risks to inflation rising due to the possibility of exchange rate volatility, especially if global and geopolitical developments lead to additional pressures on the currency, such as the recent sell-off in emerging markets and the decline in revenues from the Suez Canal.
Furthermore, there are limited chances of inflation falling below expectations, which include the continued contraction of food prices, as occurred in June, although this is unlikely given the absence of significant government support or price caps.
It’s worth noting that the CBE decided to keep interest rates unchanged during its last meeting on July 10, despite the larger-than-expected decline in the inflation rate during June to 14.9% from 16.9%.
According to an official statement, the CBE’s Monetary Policy Committee prefers adopting a careful approach when it comes to assessing the impact of fiscal adjustment measures such as the recent legislative amendments related to VAT reforms.
Deutsche Bank has expressed its support for this view, highlighting the uncertainty caused by geopolitical and global tensions.
Sun, Jul. 20, 2025
