- Decision
- Raise
- Rate change
- 100 bps
- overnight deposit rate
- 20%
The Central Bank of Egypt’s Monetary Policy Committee raised key policy rates by 100 basis points, taking the overnight deposit rate to 20.0%, the overnight lending rate to 21.0% and the main operation and discount rates to 20.5%, to anchor inflation expectations and safeguard disinflation amid mounting external risks. The move followed 100-basis-point cuts in December 2025 and February 2026 that lowered the deposit rate to 19%, followed by holds through September. Annual headline inflation eased to 13.9% in September 2026, although monthly headline and core inflation accelerated. The central bank said tighter policy would support convergence toward its inflation target of 7%, plus or minus 2 percentage points, on average in Q4 2027. Its nowcast points to broadly stable real gross domestic product growth in Q3 2026, near the 4.7% recorded in the preceding quarter, with below-potential output expected to limit near-term demand-driven inflation pressures. Globally, activity remained resilient, but regional tensions and supply disruptions pushed energy and agricultural prices higher, while tighter financial conditions and trade disruptions clouded the outlook. The committee also highlighted the risk of higher-than-expected pass-through from domestic fiscal consolidation and said it would reassess its stance against evolving economic conditions, the inflation trajectory and the balance of risks, adjusting policy as necessary.
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 Monetary Policy Committee (MPC) 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 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. On September 24, the MPC again held rates 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, prompting the Central Bank of Egypt to lower its inflation forecast.
On October 29, 2026, the MPC raised key policy rates by 100 basis points, taking the overnight deposit rate to 20.0 percent, the overnight lending rate to 21.0 percent, and the rate of the main operation and the discount rate to 20.5 percent. Although annual headline and core inflation eased to 13.9 percent and 14.1 percent, respectively, in September, monthly inflation accelerated, and the MPC judged tighter policy necessary to anchor inflation expectations and preserve convergence toward the 7 percent target, plus or minus 2 percentage points, on average in the fourth quarter of 2027, citing risks from persistent regional conflict, higher global energy and other commodity prices, tighter global financial conditions and a higher-than-expected pass-through of domestic fiscal consolidation measures.