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Economy March 30, 2026

Egypt's Central Bank Poised to Hold Rates as Iran War Raises Inflation Risks

Poll of economists sees no easing as higher energy costs and weaker tourism threaten macro outlook

By Marcus Reed
Egypt's Central Bank Poised to Hold Rates as Iran War Raises Inflation Risks

A poll of 17 economists expects the Central Bank of Egypt to keep its deposit and lending rates unchanged at 19.0% and 20.0% respectively when the Monetary Policy Committee meets on Thursday. The anticipated pause in a previously planned easing cycle follows concerns that the U.S.-Israeli war on Iran has pushed up the country’s energy import bill and could dent key foreign-exchange earners while stoking inflation.

Key Points

  • Poll of 17 economists expects CBE to keep deposit rate at 19.0% and lending rate at 20.0% when it meets on Thursday - impacts banking and fixed-income markets.
  • Rising energy import bill - more than doubled since the outbreak of the U.S.-Israeli war on Iran - threatens fiscal and external balances and affects energy and trade sectors.
  • Elevated inflation readings (13.4% in February, up from 11.9% in January) and potential hits to tourism, Suez Canal tolls and remittances increase macro uncertainty affecting tourism, shipping and remittance-dependent services.

CAIRO, March 30 - A survey of economists indicates the Central Bank of Egypt (CBE) will maintain its overnight policy stance when its Monetary Policy Committee convenes on Thursday, reversing an earlier expectation of a gradual loosening of policy. All 17 economists polled forecast that the CBE will hold the deposit rate at 19.0% and the lending rate at 20.0%.

Respondents cited the risk that the U.S.-Israeli war on Iran could provoke higher inflation in Egypt, undermining the window for further rate cuts. Prime Minister Mostafa Madbouly has said that Egypt’s energy import bill has more than doubled since the outbreak of the war. He also warned that important sources of foreign income - tourism, Suez Canal tolls and remittances from Egyptians working in Gulf countries - could be negatively affected.

Market and policy commentators reflected the shift in expectations. Daniel Richards of Emirates NBD said:

"Any further rate cuts are on hold for the foreseeable future. We don’t think the time has come for hikes just yet, until there is further clarity around the inflationary pass-through of the Iran war."

Inflation data have reinforced the cautious stance. Egypt’s annual urban consumer price inflation rose to 13.4% in February, above market expectations and up from 11.9% in January, though still well below a peak of 38% recorded in September 2023. Official figures for March’s inflation are scheduled to be released late next week.

Ivan Burgara of banking trade group IIF pointed to several factors likely to prompt a more guarded approach by the central bank, saying:

"Strong inflation in February, fuel price hikes, and an uncertain external environment will lead to a more cautious CBE."

The CBE had initiated an easing cycle last April after taking emergency measures earlier in the year. In March 2024 the central bank raised its lending rate to 27.25% as part of an $8 billion financial support package with the International Monetary Fund, and it also implemented a sharp adjustment to the exchange rate of the Egyptian pound against the dollar.

With elevated inflation readings, rising fuel costs and an uncertain external environment tied to regional conflict, the unanimous view among surveyed economists is that the CBE will hold policy steady at its upcoming meeting.

Risks

  • Inflationary pass-through from the U.S.-Israeli war on Iran could force the central bank to delay easing - risk to consumer price stability and real incomes, with knock-on effects for consumption and retail sectors.
  • A doubling of the energy import bill raises external financing pressures and could widen deficits - risk to public finances and energy-intensive industries.
  • Potential declines in tourism, Suez Canal tolls and Gulf remittances could reduce foreign-exchange inflows, heightening pressure on the currency and affecting shipping and services sectors.

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