Arab Finance: HC Securities & Investment expects the Central Bank of Egypt (CBE) to leave key interest rates unchanged at its monetary policy meeting on July 9th, HC said in a research note.
The brokerage cited that regional tensions stemming from the conflict involving the US, Israel, and Iran continue to pose risks to Egypt's economy, although the country's external position and flexible exchange rate have so far helped cushion the impact.
HC Securities highlighted a $1.68 billion increase in Egypt's net international reserves since the start of the year to $53.1 billion in May, while deposits outside official reserves rose to $11.0 billion after recovering in May.
It also noted that Egyptian banks' net foreign assets recovered by $1.57 billion month-on-month in April after declining in February and March, supported by narrower foreign treasury outflows. Egypt recorded net foreign inflows of $4.55 billion in the first six months of 2026, compared with $1.34 billion in the same period a year earlier.
Meanwhile, the Egyptian pound has appreciated about 11% against the US dollar since the first week of April, trading at around EGP49.1 per dollar and reducing its year-to-date depreciation to about 3%, according to the report.
HC also pointed to improving foreign currency inflows, with workers' remittances rising about 38% year-on-year to $17 billion in the first four months of 2026, while Suez Canal revenues increased about 27% to $1.56 billion over the same period.
The firm expects annual headline inflation to remain broadly stable after slowing to 14.6% in May from 15.2% in March, despite the impact of higher energy prices and exchange-rate movements.
HC estimated that the latest 12-month treasury bill yield of 24.7% implies a positive real interest rate of about 6.8%, based on its revised 12-month inflation forecast of around 14%.
"Given the geopolitical risks and their implications for Egypt’s USD resources, our downward revision of inflation estimates, the need to maintain the carry trade attractiveness, and the budget deficit targets, we expect the MPC to keep interest rates unchanged at its 9 July meeting," HC's financials analyst and economist Heba Monir said.
The CBE's Monetary Policy Committee left its overnight deposit and lending rates unchanged at 19.0% and 20.0%, respectively, at its May 21st meeting, after cumulative rate cuts of 825 basis points since 2025. The central bank also lowered the required reserve ratio (RRR) for commercial banks by 200 basis points to 16.0% in February 2026.
Egypt's annual urban headline inflation eased to 14.6% in May from 14.9% in April, according to data from the Central Agency for Public Mobilization and Statistics. Monthly inflation accelerated to 1.6% from 1.1% over the same period.
