The National Bank of Egypt (NBE) and Banque Misr decided Wednesday to raise interest rates on three-year savings certificates that pay monthly returns, lifting them to 17.25% from 16%. Analysts told Al Manassa the move signals expectations of a fresh inflationary wave.
Walaa Muslim, head of research at Prime Securities, said inflation is expected to climb in the coming months, forecasting a rate of at least 16% in April. She explained that the anticipation of higher prices prompted the two banks to raise yields on monthly certificates in a bid to absorb liquidity and make savings instruments more attractive.
The shift follows a monetary easing cycle pursued by the Central Bank of Egypt (CBE) since April 2025. During that period, the CBE slashed key interest rates by 8.25 percentage points to reach 19%, capitalizing on inflation falling to approximately 10.1% at the start of the year. This trend led to lower certificate yields, with the NBE cutting the three-year rate to 16% last December.
However, the outbreak of the American-Israeli war against Iran in February, and its subsequent impact on the pound’s depreciation against the dollar and rising energy costs, pushed inflation to 13.5% in March.
“It is likely that current interest levels will be maintained,” Muslim added. “If the real yield declines due to inflation rising further in the coming period, the Central Bank may move to raise interest rates again.”
The state’s banking arm
Analysts believe the decision by NBE and Banque Misr reflects the broader direction of the banking sector, given their dominance as state-owned institutions. “The moves of these two banks often reflect monetary policy trends. As the state’s primary banking arm, new policies are typically implemented through them first,” Ibrahim Adel, a macroeconomic analyst at Mubasher Trade Egypt, told Al Manassa.
Adel added that the weakening of the pound during the war was a primary factor driving inflation expectations. “Inflation is likely to reach 17% by the end of the year,” he said.
The dollar exchange rate reached record levels during the Iranian war, exceeding 54 pounds, before falling back slightly following the announcement of a US-Iranian truce. However, it remains above pre-war levels.
Adel noted that the deciding factor for the attractiveness of certificate rates is the real interest rate—the yield after accounting for inflation. If inflationary pressures increase, interest rates lose value in the eyes of savers.
Future scenarios
Looking ahead, Mohamed Abdel Aal, a board member of the Egyptian Gulf Bank, outlined three possible scenarios for interest rates. The most likely, he said, is that official rates remain unchanged, with banks relying on savings certificates and other market tools to manage liquidity. A second scenario would see a limited hike if inflation rises faster than expected, while a third suggests delaying any cuts until the end of the year, contingent on improved inflation and more stable global conditions.
Abdel Aal told Al Manassa the move reflects a transitional phase in monetary policy, marked by flexibility and the use of multiple instruments to balance inflation control with economic stability.
The household sector is the largest saver in local currency in the banking system, compared to private and public sector companies. Total household deposits reached approximately 7.2 trillion pounds (about $138 billion) as of Aug. 2025. The CBE utilizes interest rates to manage inflation and keep it within target levels.
