Egypt's Bond Market Awaits Central Bank Decision Amid Interest Rate Speculations

See - Sada Elbalad

11-04-2025

Ahmed Emam
Mohamed El-Naggar, Head of Debt Instruments at NIR Consultancy, stated that Egypt's financial markets are in a state of anticipation as investors await the Central Bank of Egypt's (CBE) upcoming decision on interest rates. The speculation follows significant economic shifts since the Egyptian pound was floated in March 2024 and interest rates were hiked to record highs exceeding 27%.
In an interview with *Al Arabiya Business*, El-Naggar noted that bond yields have seen relative stability in recent weeks. This has raised questions among investors about whether the CBE will consider a rate cut following a decline in inflation, or if it will maintain current rates in alignment with the U.S. Federal Reserve's policy stance.
He added that foreign investors have shown strong interest in short-term debt instruments, aiming to capitalize on any potential future changes in yields.
El-Naggar also pointed out that market expectations lean toward the central bank holding interest rates steady in its April meeting, with a possible rate cut in June 2025. Such a move would support the government's efforts to finance upcoming social spending packages and close projected funding gaps.
Over the past week, yields on local debt instruments in Egypt have declined between 1% and 2.5%, driven by strong foreign demand for Egyptian treasury bills and bonds. This demand has been evident both in primary auctions conducted by the Ministry of Finance and in secondary market trading on the Egyptian Exchange.
Specifically, the yield on three-month treasury bills dropped to 27.9%, down from 30.6% two weeks earlier. Yields on six-month and nine-month bills also fell to 26.1% and 25.8%, respectively, compared to 27.2% and 27% in the previous period.
The upcoming CBE meeting is being closely monitored by investors for signs of a potential shift in monetary policy that could shape Egypt's debt market trajectory for the rest of the year.
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