Investment Banks' Expectations for Inflation, Interest Rates, and the Dollar in Egypt During 2026

SadaNews - Estimates from five investment banks and research institutions surveyed indicate a gradual improvement in the macroeconomic indicators of the Egyptian economy throughout 2026, supported by an expected decline in inflation rates, a clear easing monetary policy cycle, and relative stability in the exchange market, all of which opens the door for a significant reduction in interest rates and supports growth rates.

The prominent banks that participated in the survey include: "EFG", "National Bank of Egypt, Pharaohs", "CI Capital", "Mubasher Financial", and "Arabi Online".

"EFG": Interest Rate Cut to 15%... Inflation in the Range of 8–10%

"EFG Holding" expects that the Egyptian pound will experience a slight decline over the next year, with the average exchange rate of the dollar reaching about 48.04 pounds in 2026, and up to 49 pounds in 2027. It also expects GDP growth of about 5% over the next year, before slowing slightly to 4.6% in 2027.

Regarding dollar flows, the group anticipates an increase to about 16.2 billion dollars in 2026, which is expected to reach 14.2 billion dollars in 2027. They believe that progress in the privatization program and the offering of state shares could represent a potential positive factor, noting that any unexpected deal might contribute to enhancing foreign reserves and improving the country's external situation, despite the limited visibility and progress in this file in recent periods.

The performance of the Egyptian pound has improved significantly over the past five months, reaching its highest level in over a year, supported by strong foreign currency inflows as the tourist season and summer holidays begin.

In terms of monetary policy, "EFG Holding" expects the Central Bank of Egypt to lower interest rates by 600 to 700 basis points during the new year, bringing policy interest rates to around 15% by the end of the year. They also expect average inflation to reach a range of 8% to 10% by the end of 2026, representing an additional decline of 4 to 6 percentage points compared to 2025 levels.

Currently, the overnight deposit and lending rates and the central bank's main operation rate are 21%, 22%, and 21.5%, respectively, after a series of interest rate cuts totaling 625 basis points since the beginning of the year, marking the first easing cycle in four and a half years.

The Central Bank of Egypt Cuts Interest Rates for the Fifth Time in 2025

The pace of inflation in Egyptian cities slowed in November, after accelerating the previous month for the first time in four months, with consumer prices in urban areas rising year-on-year to 12.3% compared to 12.5% in October. The monthly inflation rate was 0.3% compared to 1.8% the previous month, according to data from the Central Agency for Public Mobilization and Statistics.

The real interest rate in Egypt, which is the nominal interest rate minus the inflation rate, is about 8.5%.

"National Bank of Egypt, Pharaohs": Improvement of the Pound and Overnight Rate Cut to 13%

Hani Genina, head of research at "National Bank of Egypt, Pharaohs", expects inflation in Egypt to decline to a range of 10% to 11% during 2026, driven by reduced price pressures and improved monetary conditions, allowing the central bank to lower nominal interest rates while maintaining a positive real interest rate at 2–3% by the end of the year.

He noted a gradual improvement in macroeconomic indicators, with the monetary policy entering a clear easing cycle, expecting the overnight interest rate to decrease from about 21% at the end of 2025 to around 13% by the end of 2026, alongside a decrease in real interest rates to a range of 2–3%.

Regarding the exchange rate, Genina anticipates the performance of the Egyptian pound to improve, supported by foreign currency inflows and the return of interest trade activity, with an expected average dollar price of around 46 pounds in 2026, and a price of approximately 45 pounds by the end of the year. As for economic growth, "National Bank of Egypt, Pharaohs" views the Egyptian economy as approaching its potential growth, driven by entering a broad investment expansion cycle, with expectations of real GDP growth of about 4.3% to 4.6%.

"CI Capital": Dollar between 47.5 and 48.5 pounds

Sarah Saada, chief economist at "CI Capital", believes that interest rates are likely to decline during 2026, including the next central bank meeting, with a total reduction approaching 600 basis points, supported by an expected decrease in inflation rates to around 11%.

Saada set the expected range of the average exchange rate of the pound against the dollar between 47.5 and 48.5 pounds during the next year, also predicting GDP growth of about 5%, supported by improved economic activity and stability in the macro environment.

"Arabi Online": Easing Continues Provided There Are No Shock Events

Mostafa Shafee, head of research at Arabi Online for Securities Trading, expects the Central Bank of Egypt to continue its monetary easing approach during 2026, targeting an interest rate cut of 600 to 700 basis points, in a move reflecting increasing confidence in the path of economic stability.

He explained that this outlook is based on the expected easing of inflation rates, along with the expansionary policy of the U.S. Federal Reserve, in addition to relative stability in the exchange market. Regarding inflation, Shafee forecasts that rates will average around 10% during the year, provided there are no sudden global or regional shocks.

Regarding the exchange market, Shafee believes that the exchange rate of the pound is likely to move within a range of 5%, between 47 and 54 pounds to the dollar, supported by strong dollar sources, especially exports, significant growth in the tourism sector, and revenues from the Suez Canal, in addition to investment inflows. However, he also warned that foreign investments in debt instruments, which are close to 42 billion dollars, represent a double-edged sword in the event of a sudden exit.

Regarding economic growth, Shafee predicts that GDP will achieve growth rates ranging between 4.5% and 5% during 2026, supported by active sectors led by tourism, along with heavy and manufacturing industries and the retail sector.

"Mubasher": Dollar May Approach 45 Pounds

Ahmed Abdel Nabi, head of research at Mubasher for Securities Trading, predicts that the central bank will continue monetary easing by lowering interest rates by around 600 additional basis points, driven by a decrease in inflation rates and a desire to support economic growth and reduce the debt service burden.

Abdel Nabi believes that inflation may decline to around 10.7% during 2026, as a result of controlling the money supply, and stabilizing the value of the pound, which supports stability in the import bill, alongside the expected decline in global oil prices with ample supply and the calming of regional tensions.

Regarding the exchange rate, he expects the dollar to move close to the level of 45 pounds, with an increase or decrease of about 5%, supported by a rise in net assets and foreign reserves, and a revival of foreign currency sources, such as revenues from the Suez Canal and tourism, as well as a weakening dollar globally. As for economic growth, he predicts that the GDP growth rate will reach about 5.6%, driven by a 7% increase in private consumption, as it is the largest component of GDP, against the backdrop of increasing minimum wage and government plans to support investment and increase exports.