- Decision
- Maintain
- Rate change
- 0 bps
- overnight deposit rate
- 19%
The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) held the overnight deposit, overnight lending and main-operation rates at 19.00%, 20.00% and 19.50%, respectively, and the discount rate at 19.50%, judging the restrictive stance sufficient to preserve disinflation and buffer upside risks despite a downward revision to its inflation forecast. Over the past year, the MPC cut key rates by 100 basis points in October and December 2025 and February 2026 to their current levels, then held them from April. Annual headline inflation eased to 14.5% in August, and the CBE expects it to stabilize on average in the third quarter before gradually converging toward the 7% target, plus or minus 2 percentage points, during the second half of 2027. Real GDP growth slowed to 4.7% in the second quarter from 5.0% in the first, while growth averaged 5.1% in FY2025/26 and is expected to remain broadly near that pace in FY2026/27, with below-potential output limiting near-term demand pressures. Globally, activity moderated amid geopolitical volatility and subdued demand, while escalating regional tensions and supply concerns lifted energy and agricultural prices. The MPC said it will remain vigilant and stands ready to deploy all available policy tools to ensure 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.