Central Bank of Egypt raises key interest rates by 100 basis points as inflation risks increase

The Central Bank of Egypt’s Monetary Policy Committee raised key interest rates by 100 basis points to counter growing inflation risks despite a continued decline in annual inflation. The overnight deposit and lending rates increased to 20.0% and 21.0%, respectively. The main operation rate and the credit and discount rate both rose to 20.5%. Annual headline and core inflation fell to 13.9% and 14.1%, respectively, in September 2026, but monthly rates accelerated to 1.3% and 0.8%. The pickup in monthly core inflation reflected higher core food prices and seasonal effects. Output remains below capacity, while restrictive monetary conditions are expected to keep inflationary pressures from demand limited in the short term. The tighter stance aims to anchor inflation expectations and maintain progress toward average inflation of 7%, plus or minus 2 percentage points, in the fourth quarter of 2027. Risks have increased since the committee’s previous meeting, particularly from a prolonged regional conflict that could raise global energy and other commodity prices, feeding imported inflation. Other risks include tighter global financial conditions and larger than expected effects from domestic fiscal consolidation.