- Decision
- Maintain
- Rate change
- 0 bps
- overnight deposit rate
- 19%
The Monetary Policy Committee of the Central Bank of Egypt kept its key policy rates unchanged, leaving the overnight deposit rate at 19.00%, the overnight lending rate at 20.00%, the main operation rate at 19.50% and the discount rate at 19.50%, saying the decision reflected current inflation dynamics and the evolving outlook and would maintain an adequately positive real interest margin on average over the forecast horizon, supported by better-than-expected macroeconomic developments since the previous meeting. Domestically, real GDP growth moderated to 5.0% in Q1 2026 and the nowcast for Q2 2026 points to a mild deceleration due to the adverse impact of regional conflict, while the Central Bank of Egypt projects growth of around 5.0% in FY 2025/26, with output below potential and limited short-term demand-driven inflation pressures. Annual headline inflation eased to 14.3% in June 2026 and monthly headline inflation fell to -0.4%, while annual core inflation edged up to 14.3% on an unfavorable base effect even as monthly core inflation slowed to 0.3%. The central bank said favorable exchange-rate developments and a broad-based decline in inflationary pressures should help moderate the expected acceleration in headline inflation through Q3 2026, after which inflation is projected to gradually decline to single digits in line with the 7% target, plus or minus 2 percentage points, in H2 2027. Globally, it cited slower growth, persistent trade policy uncertainty, geopolitical volatility and firmer energy prices as key risks, and said it will continue to assess the stance based on incoming conditions and will not hesitate to tighten further to ensure inflation returns to target in the near term.
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.