The Central Bank of Egypt plans to offer Treasury bills worth 115 billion Egyptian pounds on Sunday, September 13, on behalf of the Ministry of Finance, as markets await the results of the Monetary Policy Committee meeting scheduled for next week based on the available information.
Details of the Treasury bill offering
In the latest Treasury bill offering, the average interest rate on six-month bills was 25.657%, while the average rate on 12-month bills was 25.275%. The rate reached 24.33% for three-month bills and 25.70% for nine-month bills.
Mixed inflation indicators in August
The latest data showed that annual headline inflation in Egyptian cities slowed to 14.5% in August from 14.9% in July, while core inflation rose to 14.9% from 14.7%, according to data from the Central Bank of Egypt and the Central Agency for Public Mobilization and Statistics.
Banking expert Aiten Al-Margoushi said the divergence between the two indicators calls for attention to underlying price pressures and the sustainability of the decline in inflation, rather than relying solely on the improvement in the headline measure.
Headline inflation fell despite an average 12% increase in electricity prices, as lower food prices offset the increase’s direct impact. Inflation also came in below earlier forecasts that had pointed to a possible rise to about 17% in July or August, raising the possibility that the third-quarter peak was reached at 14.9% in July, although confirmation will depend on September data.
Al-Margoushi said that the improvement’s reliance on volatile food prices, alongside the rise in core inflation, indicates that inflationary pressures have not eased broadly. She added that the indirect effects of the electricity-price increase could emerge later through higher production and services costs, warranting caution before treating the August reading as justification for a near-term interest-rate cut.
Inflation scenarios and the interest-rate path
The August reading is approaching the scenario of easing tensions in the central bank’s forecasts, which assumes average inflation of 15.2% in fiscal year 2026/2027 and 7.7% in 2027/2028.
The baseline scenario, at 16.6% and 8.1%, respectively, remains in place, as the central bank’s forecasts represent annual averages that take into account risks related to energy, the exchange rate and fiscal measures. Under a scenario of renewed or prolonged conflict, inflation could reach 17.8% and 8.3%, respectively, potentially delaying monetary easing.
Al-Margoushi said that with the deposit rate steady at 19%, the real interest rate stands at about 4.5 percentage points in positive territory, reflecting the continued restrictive monetary policy and leaving room for future rate cuts. She noted that inflation remains above the central bank’s target range of 5- 9%, with risks continuing to stem from electricity and oil prices, regional tensions, exchange-rate movements and accelerating economic activity.
She added that the August reading reduces the likelihood of further monetary tightening and creates more room for future cuts, but does not make an interest-rate cut during 2026 the baseline scenario. She expects rates to remain unchanged through the end of 2026, followed by gradual cuts during 2027 if headline and core inflation continue to decline and the Egyptian pound remains stable.
