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Daily News Egypt
09-07-2025
- Business
- Daily News Egypt
CBE to decide on interest rates amid strong market expectations of hold
The Central Bank of Egypt's Monetary Policy Committee (MPC) will hold its fourth scheduled meeting of the year on Thursday to determine the direction of interest rates, with strong market consensus pointing to a hold following two consecutive rate cuts earlier this year. The CBE previously slashed key interest rates by a cumulative 3.25% — a 2.25% cut on 17 April and a further 1% on 22 May — bringing the current rates to 24% for overnight deposits, 25% for overnight lending, and 24.5% for both the credit and discount rate and the main operation rate. In its May policy statement, the central bank cited a decline in inflationary risks, aided by easing trade tensions, improved exchange rate dynamics, and the normalisation of risk indicators, as justification for continuing its monetary easing cycle. The statement also highlighted that annual inflation fell sharply in Q1 2025, driven by waning inflationary pressures, tight monetary policy, a favourable base effect, and the dissipation of earlier shocks. The CBE noted that core inflation has steadily declined since early 2025 and is now gradually aligning with the bank's medium-term target of 7% (±2%) on average by Q4 2026. It projected that headline inflation would continue its downward trajectory through the remainder of 2025 and into 2026. However, the pace of decline may be moderated by fiscal consolidation measures and relatively stable non-food inflation. Still, the bank warned of persisting upside risks — including global protectionist trade trends, ongoing regional conflicts, and stronger-than-expected fiscal tightening. The CBE reiterated its commitment to a data-driven, meeting-by-meeting approach, adding that it would continue monitoring economic and financial developments closely and would not hesitate to utilise all policy tools to achieve its inflation target. In parallel, Egypt's annual urban inflation rate declined to 14.9% in June from 16.8% in May, according to figures released Wednesday by the Central Agency for Public Mobilisation and Statistics (CAPMAS). Month-on-month, consumer prices fell 0.1% in June, reversing a 1.9% rise in May. Nationwide inflation also eased to 14.4% from 16.5% in the same period. A consensus of investment banks — including HC Securities & Investment, Al Ahly Pharos, CI Capital, Naeem Brokerage, Mubasher Trade, and Arabeya Online — expects the CBE to keep rates unchanged in tomorrow's meeting, citing geopolitical tensions and the likelihood of rising fuel and electricity prices as key factors that could reignite inflationary pressures. Heba Monir, economist at HC Securities & Investment, stated: 'Egypt's external position showed resilience during the regional turbulence in June. The USD/EGP rate remained stable at EGP 49.6/USD by month-end, and the country's 1-year credit default swap (CDS) narrowed to 301 basis points, down from 333 at the start of the year.' She added that foreign investors were net buyers in Egyptian treasury bonds, purchasing EGP 1.2bn worth in June despite some capital outflows linked to the Israel-Iran conflict. Interbank FX trading volume peaked at $800 million mid-June — significantly higher than the average $150m–250m — while worker remittances surged 39% year-on-year in April to $3bn, reaching $29.4bn in the first ten months of FY2024/25, reflecting stronger confidence in Egypt's FX liquidity. Domestically, Egypt's Purchasing Managers' Index (PMI) rose to 49.5 in May, up from 48.5 in April, buoyed by renewed growth in the manufacturing sector. However, several sub-indices continued to signal underlying weakness in business conditions. Looking ahead, Monir cautioned that inflation could rise again in July, citing Parliament's recent amendments to the Value Added Tax (VAT) Law, which are expected to raise cigarette prices by 16% and possibly electricity prices due to higher natural gas costs. On the global front, she noted that US President Donald Trump's statement ruling out an extension of the 9 July deadline for trade deal negotiations could signal a return to higher tariffs, potentially fueling global inflation. Despite these risks, Egypt's carry trade remains attractive. The latest 12-month T-bill auction yielded 24.833%, translating into a real return of 5.21% based on HC's 12-month inflation forecast of 16.03%, adjusted for the 15% withholding tax applied to foreign investors. Moreover, the average return demanded by foreign investors fell to 27.2% in June, down from 28% in May. 'Given the mix of domestic inflationary pressures, geopolitical uncertainty, and global trade risks, we expect the CBE to keep rates on hold in its 10 July meeting,' Monir concluded.
Zawya
07-07-2025
- Business
- Zawya
Egypt: HC Securities expects CBE to maintain interest rates
Arab Finance: HC Securities and Investment expects the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) to keep interest rates unchanged at its meeting on July 10 th, 2025, according to a press release. HC Securities attributed its projections to Egypt's macroeconomic developments and the geopolitical conditions. Financial analyst and economist at HC, Heba Monir, commented: 'Egypt's external position showed resilience during the turbulent regional geopolitical tensions in June.' She reflected on the FX flexibility, with the exchange rate between the USD and EGP recording EGP 49.6 by the end of June, almost unchanged compared to the previous month. Monir also mentioned that Egypt's one-year CDS declined to 301 bps from 333 bps at the beginning of the year. In June, foreign investors were net buyers in the secondary market of Egyptian treasuries by EGP 1.2 billion due to the attractive treasury yields. However, some foreign outflows caused interbank volume to surge to $800 million in mid-June due to the Israel-Iran conflict. This amount was higher than the daily average of between $150 million and $250 million. Egypt's worker remittances also surged by 77.1% year on year (YoY) during the first 10 months of fiscal year (FY) 2024/2025 to $29.4 billion, reflecting confidence in the FX liquidity in Egypt. Regarding the non-oil business, the PMI index increased to 49.5 in May from 48.5 in April, driven by the renewed growth in the manufacturing sector. 'However, we expect some inflationary pressures in July as the Egyptian Parliament approved this week some amendments to the value-added tax (VAT) Law for some businesses, including cigarettes and tobacco,' she noted. At its May 22 nd meeting, the MPC cut the benchmark overnight deposit and lending rates by 100 bps to 24% and 25%, respectively, for the second time, after it had cut policy rates by 225 bps on April 17 th. © 2020-2023 Arab Finance For Information Technology. All Rights Reserved. Provided by SyndiGate Media Inc. (
Al-Ahram Weekly
21-05-2025
- Business
- Al-Ahram Weekly
Interest rate cuts on the horizon? - Economy - Al-Ahram Weekly
Experts have been speculating about whether the Central Bank of Egypt's Monetary Policy Committee will cut interest rates at its meeting this week Inflation in Egypt is forecast to average around 14 to 15 per cent and 10 to 12.5 per cent in the calendar years 2025 and 2026, respectively, compared to 28.3 per cent in 2024, according to the Central Bank of Egypt's (CBE) quarterly Monetary Policy Report. The report, relaunched on Monday after a couple of years of hiatus, is part of the CBE's efforts to implement an inflation-targeting framework and enhance its policy transparency. It serves as the primary tool for explaining the rationale behind monetary policy decisions. According to the report, headline inflation is expected to continue declining throughout the remainder of 2025 and 2026, albeit at a slower pace compared to the significant decline witnessed in the first quarter of 2025. 'The slower disinflation path is partially due to the drag from implemented and planned fiscal consolidation measures across the forecast horizon, in addition to the relative persistence of non-food inflation,' the report said. All things being equal, inflation is expected to converge towards the CBE's target band of five to nine per cent on average in the fourth quarter of 2026, it added. The report was published at a time when experts are speculating about what the Monetary Policy Committee (MPC) will decide regarding interest rates at its meeting on 22 May. The MPC had cut the overnight deposit rate, overnight lending rate, and the rate of main operations by 225 basis points (bsp) (2.25 per cent) to 25 per cent, 26 per cent, and 25.5 per cent, respectively, at its last meeting on 17 April. 'We expect the MPC to cut interest rates by 200 basis points (two per cent)… mainly to stimulate economic growth, given the relative stability in the domestic and international economic conditions compared to the previous month,' financial analyst and economist at HC Securities Heba Monir wrote in a note on Monday. 'The Egyptian economy was able to contain the inflationary pressures… our carry trade is still attractive, and there is a noticeable improvement in the Net Foreign Assets [NFA] position of the banking sector, facilitating foreign exchange liquidity and availability,' Monir wrote. On a similar note, Aya Zoheir, head of research at Zilla Capital, was quoted as saying that the MPC is likely to cut interest rates by 100 basis points (one per cent). She said that there are clear signals from the US Federal Reserve towards starting to lower interest rates in the near future, and major central banks like the European Central Bank and the Bank of England have already taken steps in this direction, which eases pressures on emerging markets. According to Zoheir, high interest rates have become a burden on growth, and they also contribute to creating inflationary pressures. Referring to the MPC's decision to cut interest rates by 225 basis points on 17 April, she said it was unusual for an easing cycle to begin and then stop without clear justification, which could confuse the markets and raise questions about the consistency of the monetary policy direction. Before cutting rates on 17 April, the MPC had hiked rates by a total of 1,900 bps (19 per cent) since it started its tightening policy in 2022. An analyst interviewed by Al-Ahram Weekly did not believe a rate cut is in order, however. He said that on a monthly basis, aside from the drop in food inflation, everything else had increased in price. In his calculation, after discounting items such as education and cigarettes, which do not experience regular hikes, the monthly inflation rate in April was the highest since February 2024 at 3.5 per cent. He believes that with an unfavourable base effect, since May last year saw cooler inflation, the annual rate is likely to accelerate. He is expecting a pause by the MPC and a resumption of monetary easing at its July meeting. On an annual basis, urban headline CPI (consumer price) inflation recorded 13.9 per cent in April 2025 compared with 13.6 per cent in March 2025. Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), said in an interview in late April that any further reductions in interest rates should be approached with caution. It was important to be vigilant in managing monetary policy in the light of the current shocks, Azour said, adding that the IMF sees risks of a return of inflation and therefore advises that it is necessary to maintain a policy that leads to reducing inflation to stable single-digit levels. What is important, the analyst who spoke to the Weekly said, was that the easing cycle has begun. The fact that there are differences about when it will happen should not be an issue, he added. He sees the MPC cutting 900 basis points (nine per cent) off interest rates before the end of the year and between 500 and 600 basis points (five to six per cent) next year. The MPC meeting coincides with a visit by an IMF mission for the fifth review of Egypt's $8 billion Extended Fund Facility (EFF) loan agreement. Nigel Clarke, IMF deputy managing director, was also in town for a two-day visit. Clarke met with Prime Minister Mustafa Madbouli, the governor of the CBE, and the finance minister and participated in the inaugural IMF Middle Eastern and North Africa (MENA) Research Conference at the American University of Cairo to discuss policy priorities for the region. He also took part in a forum organised by the Lynx Strategic Business Advisors Forum, where he met with senior business executives. According to the analyst, the IMF mission is likely to focus on three main issues during the fifth review: boosting private-sector participation in the economy; mobilising revenues from sources such as the Value Added Tax (VAT); and progress on the sale of stakes in state-owned enterprises. In a statement following the IMF board of director's completion of Egypt's earlier fourth review, the IMF pointed to the need to take 'decisive measures to re-start divestment efforts, firmly reduce the state's footprint, and level the playing field.' It also highlighted the importance of 'broadening the tax base, streamlining tax incentives, and enhancing compliance' to create the fiscal space for priority development and social needs. Ahmed Kouchouk, Egypt's minister of finance, confirmed during his meeting with Clarke the government's 'commitment to continue adopting polices and reforms that enhance the role of the private sector along with the competitiveness of our economy, that build trust and partnership with our taxpayers in our sincere efforts to widen the tax base, that reduce the non-tax burden on investors, that bring down the debt-to-GDP ratio along with debt-service bill, and that create adequate space for additional targeted social and human capital spending.' He noted that Egypt's GDP growth reached 3.9 per cent during the first half of the year, driven by strong private-sector activities. He also said that tax revenues were growing by 38.4 per cent, the highest rate recorded in decades. He reiterated his commitment to cutting public debt, saying that 'we expect our budget sector debt to continue to decline as a percentage of GDP to reach 85 per cent by June 2025, down from 96 per cent in June 2023.' * A version of this article appears in print in the 22 May, 2025 edition of Al-Ahram Weekly Follow us on: Facebook Instagram Whatsapp Short link:
Zawya
05-05-2025
- Business
- Zawya
Egypt's Banking Sector sees notable improvement in net foreign asset position in March
Egypt's banking sector recorded a significant improvement in its net foreign asset (NFA) position, which widened by USD 4.86 billion month-on-month to reach USD 15.0 billion in March, up from USD 10.2 billion in February. This marks a strong reversal from a net foreign liability (NFL) position of USD 4.19 billion recorded in the same month last year, according to data released by the Central Bank of Egypt (CBE). Excluding the CBE, the banking sector posted a net foreign asset position of USD 2.53 billion in March, compared to a net foreign liability of USD 1.92 billion in February and USD 2.82 billion in March of the previous year, the data showed. Commenting on the development, Financials analyst and economist at HC, Heba Monir, stated: "The month-on-month widening in the total NFA position is mainly attributed to a USD 4.51 billion increase in the banking sector's foreign assets, while foreign currency liabilities remained unchanged. This reflects a meaningful improvement in foreign exchange liquidity within the banking sector." She added: "We attribute the rise in March's foreign assets to Egypt attracting USD 2.70 billion in foreign direct investments (FDIs) during Q1 2025, reflecting approximately 15% year-on-year growth. In addition, Egypt received a USD 1.2 billion tranche from the International Monetary Fund (IMF) under the USD 8.0 billion Extended Fund Facility (EFF). Both developments have played a key role in boosting foreign currency liquidity at local banks."
bnok24
05-05-2025
- Business
- bnok24
Egypt's Banking Sector Sees Notable Improvement in Net Foreign Asset Position in March
Egypt's banking sector recorded a significant improvement in its net foreign asset (NFA) position, which widened by USD 4.86 billion month-on-month to reach USD 15.0 billion in March, up from USD 10.2 billion in February. This marks a strong reversal from a net foreign liability (NFL) position of USD 4.19 billion recorded in the same month last year, according to data released by the Central Bank of Egypt (CBE). Excluding the CBE, the banking sector posted a net foreign asset position of USD 2.53 billion in March, compared to a net foreign liability of USD 1.92 billion in February and USD 2.82 billion in March of the previous year, the data showed Commenting on the development, Financials analyst and economist at HC, Heba Monir, stated 'The month-on-month widening in the total NFA position is mainly attributed to a USD 4.51 billion increase in the banking sector's foreign assets, while foreign currency liabilities remained unchanged. This reflects a meaningful improvement in foreign exchange liquidity within the banking sector She added 'We attribute the rise in March's foreign assets to Egypt attracting USD 2.70 billion in foreign direct investments (FDIs) during Q1 2025, reflecting approximately 15% year-on-year growth. In addition, Egypt received a USD 1.2 billion tranche from the International Monetary Fund (IMF) under the USD 8.0 billion Extended Fund Facility (EFF). Both developments have played a key role in boosting foreign currency liquidity at local banks Google News تابعونا على تابعونا على تطبيق نبض جاري التحميل ...
