The Central Bank of Egypt maintained its benchmark interest rates on Thursday, extending a cautious pause in monetary policy as regional conflicts and sticky energy costs threaten to re-ignite consumer price pressures.
The Monetary Policy Committee kept the overnight deposit rate at 19.00% and the overnight lending rate at 20.00%. The main operation rate also remained unchanged at 19.50%, matching consensus market expectations.
Egyptian policymakers face severe external uncertainties linked to Middle East geopolitical tensions, which have volatilely impacted global commodity markets and disrupted trade supply chains through crucial regional waterways like the Strait of Hormuz.
“Annual headline inflation is expected to accelerate through the third quarter of 2026, partially due to unfavorable base effects, as well as supply-side pressures from the current conflict,” the committee stated in its policy release.
This rate freeze marks the bank’s second consecutive hold this year. The decision comes despite a recent marginal dip in annual headline inflation, which eased slightly to 14.9% in April from 15.2% in March.
However, core inflation remains high at 13.8%. The central bank explicitly warned that domestic fiscal consolidation measures and exchange-rate fluctuations are expected to keep near-term consumer prices elevated, delaying previous timelines for inflation stabilization.
Consequently, the bank conceded that consumer prices will likely exceed its long-term target of 7% by the final quarter of 2026, forcing a prolonged delay in achieving its price stability mandate until late 2027.
The aggressive defensive posture coincides with slowing domestic momentum. Egypt recently trimmed its financial year 2025/26 gross domestic product growth forecast down to 4.9% from 5.1%, citing weaker external demand and regional instability.
