||This paper intends to answer the following question; can the CBE achieve the goal of price stability under the currently applied monetary targeting regime? The answer depends on whether or not the demand for money function is stable in Egypt. Using quarterly data on the period 1995-2007, the study estimated the long run demand for money function in Egypt. By testing its stability for structural change, the demand for money function was found unstable. Thus, the study concludes that the central bank of Egypt cannot achieve price stability under the currently applied monetary targeting regime.