- Decision
- Lower
- Rate change
- 200 bps
- overnight deposit rate
- 22%
The Central Bank of Egypt’s Monetary Policy Committee cut the overnight deposit rate by 200 bp to 22.00%, the overnight lending rate to 23.00%, the main operation rate to 22.50% and the discount rate to 22.50%, judging that faster-than-expected growth alongside a broad-based easing in price dynamics and firmer exchange-rate conditions permit a “measured resumption” of monetary easing while keeping demand pressures contained and supporting the projected disinflation path. After holding in February, the MPC lowered rates by a cumulative 325 bp in April and May before pausing in July. Annual headline inflation fell to 13.9% in July from 14.9% in June and 15.2% in Q2, while core inflation was little changed at 11.6%; the central bank sees inflation averaging 14–15% in 2025 and converging to its 7 % ±2 pp target by Q4 2026 amid upside risks from administered prices and geopolitics. Real GDP is estimated to have grown 5.4% y/y in Q2 2025, lifting FY 2024/25 growth to 4.5% from 2.4% a year earlier, and unemployment slipped to 6.1%. Globally, a nascent recovery and steady inflation expectations have encouraged gradual policy easing abroad, though oil price volatility and trade tensions persist. The Committee will determine the “scale and pace” of further cuts on a meeting-by-meeting basis and stands ready to adjust tools to safeguard price stability.
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.