ZAWYA: HC Securities expects CBE to hold interest rates steady amid global risks

What happened

HC Securities & Investment expects the Central Bank of Egypt to keep its key interest rates unchanged at its upcoming Monetary Policy Committee meeting because of ongoing geopolitical risks, according to the ZAWYA report.

Confirmed

Global impact / market context

Holding rates steady keeps borrowing costs for Egyptian companies and the government unchanged. Higher credit default swap spreads, which are insurance-like costs on Egyptian debt, and a weaker pound can raise import costs and pressure foreign currency liquidity.

Analyst inference

The pound fell about 14% against the dollar this year. Credit default swap spreads, which are insurance-like costs on Egyptian debt, rose to 343 basis points from a low of 262. Egypt faces foreign outflows, a higher energy and wheat import bill, and payments to foreign oil companies.

Analyst inference

What to watch

1. The CBE's upcoming Monetary Policy Committee decision on key interest rates, which HC Securities expects to stay unchanged. Confirmed
2. Whether the CBE signals any future rate cut once global risks ease, a step HC has not proposed but investors may watch. Proposed
3. Egypt's foreign currency liquidity, which means cash available in foreign currencies, plus reserves and the pound level, since pressure there could raise costs for importers and companies with external debt. Analyst inference

Evidence

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