- Decision
- Lower
- Rate change
- 100 bps
- overnight deposit rate
- 20%
The Monetary Policy Committee of the Central Bank of Egypt lowered the overnight deposit rate, overnight lending rate and main operation rate by 100 bp to 20.00 %, 21.00 % and 20.50 %, and cut the discount rate to 20.50 %, judging that easier policy remains compatible with contained demand pressures and a firm disinflation trend. This step extends cumulative easing of about 725 bp since April 2025, when the deposit rate was 27.25 %. Annual headline inflation fell back to 12.3 % in November, with core inflation at 12.5 %; the central bank forecasts headline inflation at roughly 14 % on average in 2025 before declining toward its 7 % ± 2 pp target by Q4 2026, while real GDP growth is projected to moderate to around 5.0 % in Q4 2025 from 5.3 % in Q3. Oil prices have eased as global supply outpaces demand amid resilient – yet geopolitically and trade-risk-laden – world growth, and major central banks remain cautious with gradual easing. The MPC reiterated that future moves will depend on incoming data and the balance of risks and stands ready to adjust its toolkit to keep inflation on the projected disinflation path.
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.