The Central Bank of Egypt will cut interest rates by 4-6% in 2026, with banks expected to issue new savings certificates offering 18-20% yields as high-return state-backed ones at 23-27% mature in early January, analysts who spoke to Al Manassa forecast.
Two financial analysts expect the CBE to cut interest rates in the first quarter of next year by as much as 2%, bringing total cuts for the year to 6%, while a third analyst expects rates to hold early on, followed by gradual cuts totaling 4% in 2026.
While analysts differed on the size of any cuts, they agreed banks are likely to offer new savings certificates with rates of 18–20% at the start of next year, as high-yield certificates issued by state-owned banks with exceptional returns of 23% and 27% mature in early January.
Last Thursday, the CBE’s Monetary Policy Committee announced a 1% cut in overnight deposit and lending rates, its fifth consecutive cut since the start of the year, bringing the two rates to 20% and 21% respectively, for total cuts of 7.25% over the year.
Rates in 2026
Mostafa Shafie, head of research at Arabiya Online Securities Brokerage, expects the central bank to start a new rate-cut cycle in the first quarter of 2026, beginning with 2%, with total cuts for the year reaching a minimum 6%, if current supportive factors persist.
Shafie told Al Manassa that easing inflation is the main driver, especially after annual inflation declined in November, after standing at 16.8% in May, giving monetary policy more room to shift towards easing after a prolonged tightening cycle.
He said exchange-rate stability and improving foreign currency conditions in the market are key supportive factors for lower rates, particularly amid hopes of higher dollar inflows in the coming period, whether from tourism or a gradual return of activity to the Suez Canal.
He added that the US Federal Reserve’s move towards cutting interest rates eases pressure on emerging markets, creating room for central banks, including Egypt’s, to move in the same direction without major risks to exchange-rate stability or capital flows.
That view was echoed by Ibrahim Adel, an analyst at Mubasher Trade Egypt, who said “current indicators strengthen the likelihood that the Egyptian Central Bank will continue cutting interest rates in the first quarter by about 2%,” while expecting total cuts in 2026 to reach 6% at a minimum.
Adel told Al Manassa that reducing the debt-service burden is a key objective of rate cuts, especially as debt-service costs have reached about 80% of the state’s general budget, which puts significant pressure on public finances and makes lower rates a necessary tool to ease pressure on the budget.
For her part, Aya Zoheir, head of research at Zilla Capital, expects interest rates to remain steady in the first quarter of 2026, with gradual cuts of 2–4% over 2026 if macro indicators improve and deflation continues.
Zoheir told Al Manassa that monetary policy at this stage is marked by a high degree of caution and wait-and-see, particularly given the need to maintain exchange-rate stability and monitor foreign inflows, as well as regional geopolitical developments and their potential impact on global commodity and energy prices.
Impact of lower rates on savings products
On the implications of lower rates for certificates and bank deposits, Shafie said there is a direct positive correlation between the interest rates for bank certificates and the levels of the corridor. He expects that lower rates will reduce the appeal of some certificates for certain customer segments, while remaining attractive to others seeking safety and stability away from risk.
Some customers may turn to other investment alternatives as yields decline, such as stocks, real estate, gold, foreign currencies, Treasury bills and investment funds, he said, noting that a segment of investors will prefer to diversify across more than one instrument.
He added that “the real interest rate, which is close to 8%, still represents an acceptable level as inflation declines,” which helps maintain a degree of balance within the banking sector and curbs sharp waves of withdrawals from deposits.
Zoheir said the expected impact will be limited, noting that banks still have a strong deposit base, and that a large segment of customers’ behavior is primarily driven by safety and stability, not only by yield levels.
She added that some customers’ current shift into gold does not pose a material threat to the banking sector. It remains within the framework of normal portfolio diversification without leading to noticeable liquidity outflow from banks.
Adel said the decline in returns on bank certificates will push some investors to restructure their portfolios and look for alternative assets that deliver higher returns.
Institutions may shift more toward Treasury bills, given their relatively higher returns compared with bank certificates, along with higher liquidity and lower associated risks, he said.
New certificates with tiered returns
On banks’ plans to issue new certificates, Shafie expects some banks to issue short-term savings certificates with one-year tenors to attract liquidity as large deposits mature at the start of 2026. He expects rates on the new certificates to reach 20%.
Zoheir expects banks to issue new savings certificates with tiered returns, with expected interest rates ranging from 18–20% depending on the certificate tenor and the targeted segment.
She said any changes to interest rates in the coming period will be gradual and carefully calibrated, ensuring financial stability while supporting medium-term economic growth.
