- Decision
- Maintain
- Rate change
- 0 bps
- overnight deposit rate
- 24%
The Monetary Policy Committee of the Central Bank of Egypt kept the overnight deposit rate at 24.00%, the overnight lending rate at 25.00%, the main operation rate at 24.50% and the discount rate at 24.50%, judging the prevailing stance appropriate as disinflation takes hold while global growth and commodity-price uncertainties persist. Following a cumulative 325 bp of easing in April and May, annual headline inflation eased to 15.3% in Q2 from 16.5% in Q1, with June headline and core readings down to 14.9% and 11.4% respectively amid deflationary food prices; real GDP growth is projected near 4.8% in Q2, matching Q1 and narrowing a still-slightly-negative output gap that is expected to close by end-FY 2025/26. The global outlook has weakened on trade frictions and resurgent geopolitical tensions, with volatile oil and modestly lower agricultural prices keeping upside inflation risks alive. Reaffirming its 7 % ±2 pp inflation target for Q4 2026, the committee adopted a wait-and-see approach, pledging to calibrate any further easing on a meeting-by-meeting basis and to act as needed to safeguard the disinflation trajectory.
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.