A Reuters poll showed that the Central Bank of Egypt is likely to cut key interest rates by 100 basis points at its upcoming Thursday meeting amid continued slowing inflation.

The average forecast of 16 economists surveyed indicated that the Central Bank of Egypt will lower the overnight deposit rate to 21 percent and the lending rate to 22 percent at the Monetary Policy Committee meeting next Thursday. Current rates stand at 22 percent for deposits and 23 percent for lending.

John Swanstson from Capital Economics said, “We expect the continued decline in inflation to pave the way for the Central Bank of Egypt to make another significant interest rate cut, and the real interest rate will remain strongly positive.”

Data from the Central Agency for Public Mobilization and Statistics showed that annual urban consumer price inflation fell to 12 percent in August from 13.9 percent in July, after peaking at 38 percent in September 2023. Real interest rates have exceeded 10 percent, among the highest globally.

The central bank has gradually cut interest rates this year, reducing them by 225 basis points in April, 100 basis points in May, and 200 basis points in August.

Before April, the Central Bank of Egypt had kept rates unchanged since March 2024, following a sharp 600 basis point hike as part of an $8 billion financial support package with the IMF.

The money supply (M2), which reached 22.3 percent in July, has also declined in recent months.

Farouk Sosa from Goldman Sachs said, “Given recent geopolitical developments and rising oil prices, we believe they will remain relatively cautious with a 100 basis point cut.”

The automatic pricing committee for petroleum products in Egypt is scheduled to raise heavily subsidized fuel prices in early October as the country works to reduce subsidies, recover costs, and lower the current account deficit.