• Cutting inflation is the central bank's priority, and external shocks affect the path to its targets

Hassan Abdalla, Governor of the Central Bank of Egypt (CBE), said bringing down inflation is the central bank's primary objective. The target is 7%, plus or minus 2 percentage points, in the second half of 2027, then 5%, plus or minus 2 percentage points, two years later.

Speaking at sessions of the Egypt Forum 2026, Abdalla said the central bank's economic models had indicated that the 2027 target could be reached before the latest external shock. Such shocks, he noted, affect the inflation path and make it harder to tackle with monetary-policy tools.

He added that Egypt had seen inflation of about 38%, while price increases in some categories, including food and beverages, reached around 73%, reflecting the scale of the challenges facing price-stability efforts.

Abdalla noted that inflation targeting is not limited to setting a target figure; it requires coordinating the state's various policies and steering them toward a shared goal of lowering inflation. He stressed the importance of policy coordination to achieve that goal.

He explained that dealing with demand-driven inflation differs from dealing with inflation caused by supply shocks. Interest rates are more effective against the former, while addressing the fallout of supply shocks is more complex and the tool itself becomes less effective.

The governor stressed that monetary-policy decisions are forward-looking and do not rest on historical data alone. The bank has specialized departments that use models to assess current economic developments and forecast their future paths, supporting the right decisions to achieve price stability.