- Decision
- Maintain
- Rate change
- 0 bps
- overnight deposit rate
- 27.25%
The Monetary Policy Committee of the Central Bank of Egypt on 20 February 2025 left the overnight deposit rate at 27.25%, the overnight lending rate at 28.25%, the main operation and discount rates at 27.75%, judging that existing tight settings are sufficient to secure the projected disinflation path amid heightened upside risks to the outlook. The decision follows a period in which headline inflation stabilised at 24.0% in January while core inflation held at 22.6%; economic activity accelerated from 3.5% year-on-year in Q3 2024, unemployment fell to 6.4% in Q4, and the output gap remained negative, though the economy is expected to approach potential by end-FY 2025/26. Globally, the committee cited volatile commodity prices, prospects of higher grain costs, divergent policy moves by other central banks, and uncertainties stemming from protectionist trade measures and geopolitical tensions. The MPC will continue to decide policy “meeting-by-meeting”, signalling readiness to keep rates tight or deploy additional tools as needed to steer inflation lower through 2025 and anchor expectations.
Rate evolution
From July 2025 to February 2026, the Central Bank of Egypt lowered its key policy rates by 500 basis points, moving from an initial hold to cuts in August, October, December and February before holding them at subsequent meetings through September 2026. The cuts were supported by falling headline and core inflation, softer monthly price dynamics, improving inflation expectations and limited demand-side pressures, although November’s hold interrupted the easing path after headline and core inflation re-accelerated, led by non-food and services prices.
On August 20, the Committee kept the overnight deposit rate at 19.00 percent, the overnight lending rate at 20.00 percent, and the rate of the main operation and the discount rate at 19.50 percent, citing current inflation dynamics and the evolving outlook after annual headline and core inflation rose to 14.9 percent and 14.7 percent, respectively, in July 2026, while monthly measures were unchanged and output remained below potential. It expected inflation to accelerate through the third quarter of 2026 at a slower pace than projected in July before declining from the first quarter of 2027 toward the 7 percent target, plus or minus 2 percentage points, during the second half of 2027, while flagging regional hostilities and a higher-than-expected pass-through from fiscal consolidation measures as upside risks.
On September 24, the Committee again held the rates at those levels after annual headline inflation eased to 14.5 percent in August on lower food inflation, which offset increases in electricity tariffs and housing rents, while core inflation remained relatively stable at 14.9 percent and monthly headline inflation was 0.1 percent. With inflation more favorable than expected, the Central Bank of Egypt lowered its forecast and projected annual headline inflation to stabilize on average in the third quarter of 2026 before gradually converging toward the target during the second half of 2027, judging current policy restrictiveness sufficient to buffer upside risks from regional hostilities, fiscal consolidation measures and international food prices, particularly if global energy prices remain elevated.