Seven out of 13 economists surveyed by Reuters said the bank's monetary policy committee would cut overnight rates by 100 bps, which would bring the deposit rate to 14.75% and the lending rate to 15.75%.
Three economists expected even steeper 150 bps rate cuts. Three others expected the bank to keep its overnight rates unchanged.
"The lower than expected inflation print will allow the CBE scope to lower rates earlier than previously expected and in line with the US Federal Reserve's anticipated rate cut in September," said Nadene Johnson, an economist at NKC African Economics.
"Minimal inflationary pressures from the exchange rate, combined with a bearish global oil price, also support easing of monetary policy."
The Egyptian pound has appreciated about 7% against the dollar since the beginning of the year.
Headline inflation decelerated to 8.7% in July from 9.4% in June, surprising analysts who had expected inflationary pressures to rise in the wake of a round of subsidy cuts that pushed fuel prices 16-30% higher.
"The CBE could cut rates given the moderate inflation trend and global monetary easing, but we expect the bank to hold for another round of inflation data to ensure price stability following the subsidy cuts," said Bryan Plamondon, IHS Markit global economics director focusing on the Middle East and North Africa.
Scaling back fuel subsidies that have strained the budget for decades was a key plank of a three-year, $12 billion reform package signed with the International Monetary Fund in 2016.
The IMF deal, aimed at luring back investors after the years of turmoil that followed Egypt's 2011 uprising, also included a sharp devaluation of the pound and the introduction of a value-added tax.
The central bank kept rates steady at its last three meetings after a surprise 100 bps cut in February.
Some analysts who foresaw a cut on Thursday expected the bank to continue easing further at its September meeting.
"Inflation will not rise from 9-10% over the remainder of the year, supported by the base effect ... which supports a 2-3% cut over the remainder of 2019," said Radwa El-Swaify, head of research at Pharos Securities Brokerage.
Millions of Egyptians are still struggling to make ends meet, despite the rosier economic data.
Figures from the state statistics agency CAPMAS showed that the percentage of Egyptians living below the poverty line rose to 32.5% in the 2017-2018 financial year from 27.8% in 2015-2016. CAPMAS set the poverty line at an annual income of 8,827 Egyptian pounds ($533.35) per person.
($1 = 16.5500 Egyptian pounds)
(Reporting by Yousef Saba; Editing by Andrew Heavens)
By Yousef Saba
