Cairo: Inflation is expected to continue easing in the short term, supported by tight monetary policy, the Central Bank of Egypt (CBE) said, while warning that upward risks remain due to domestic demand pressures and global uncertainty.According to State Information Service Egypt, in its Monetary Policy Report for the fourth quarter of 2025, released this week, the CBE stressed that current monetary conditions will remain focused on anchoring inflation expectations and sustaining the disinflation trend to achieve its inflation target by the fourth quarter of 2026.On growth, the report projected a gradual recovery in real GDP over the medium term. After slowing to 2.4 percent in FY2023/2024, which ended on 30 June 2024, growth is estimated at 4.4 percent in FY2024/2025 and is expected to rise further to 5.1 percent in FY2025/2026 and 5.5 percent in FY2026/2027, which starts on 1 July 2026.The report also highlighted continued improvement in Egypt's external position. Net international reserves rose to $4 9.5 billion at the end of September 2025, up from $48.7 billion in June, covering around 6.3 months of imports, well above the international benchmark of three months. Reserves continued to increase, reaching $51.5 billion by the end of December 2025.However, capital flows showed some volatility. The balance of payments (BoP) recorded a slight net outflow of $0.4 billion during one quarter of 2025, compared to a net inflow of $3.8 billion in the corresponding quarter of 2024. The CBE attributed this movement to changes in foreign assets at commercial banks, partially offset by sustained foreign direct investment and portfolio inflows.Globally, the CBE expects economic growth, weighted by Egypt's main trading partners, to average around 2.2 percent in the fourth quarter of 2025, down from three percent a year earlier, and to remain broadly stable in 2026, amid rising geopolitical tensions and trade-policy risks. While global stability could support exports, tourism receipts, and remittances, the CBE noted that stronger external demand may also create upward pressure on domestic inflation.Overall, the report points to a cautiously improving macroeconomic outlook, with stronger growth projections and rising reserves, tempered by persistent inflation risks and an uncertain global environment.