Cairo, Egypt – Egypt is likely to postpone its first interest-rate reduction since 2020, as inflation unexpectedly accelerated, compounded by concerns over escalating regional conflict. Analysts, including those from Goldman Sachs, have revised their forecasts, now predicting the central bank will keep its key rate at a record-high 27.25% at its upcoming meeting.
The inflation surge, driven by rising energy costs and cuts in subsidies for essentials like fuel and electricity, has raised concerns about economic stability. September saw inflation rise to 26.4%, up from 25.7% in July, as the country grapples with the fallout from a two-year economic crisis and a significant currency devaluation. Economists now expect rate cuts to be delayed until at least the first quarter of 2025, particularly as the conflict between Israel and Iran threatens to further disrupt trade and energy markets.
Despite the inflationary pressures, some analysts, including EFG Hermes, believe the recent price hikes do not pose major risks to the overall inflation outlook, with forecasts suggesting a sharp decline by early next year.
