The Central Bank of Egypt (CBE) unexpectedly raised its benchmark interest rate by 100 basis points to 20.00% during its Monetary Policy Committee meeting on Thursday.
According to an official statement by the Central Bank of Egypt, the overnight deposit rate moved to 20.00%, while the overnight lending rate and the discount rate both rose to 21.00% and 20.50%, respectively.
CBE Governor Hassan Abdalla affirmed the preemptive tightening aims to anchor inflation expectations, safeguard Egypt’s disinflation trajectory, and absorb foreign exchange pressures and external market volatility.
For Egyptian businesses, the higher cost of capital directly escalates debt-servicing burdens and commercial borrowing rates, severely squeezing profit margins and prompting corporate CFOs to delay planned capital expenditure investments.
The policy shift caught analysts off guard after market consensus overwhelmingly projected the regulator to hold policy rates unchanged for a sixth consecutive session, following September’s cooling in annual urban inflation to 13.90%.
However, persistent import costs and currency adjustments forced monetary authorities to prioritize medium-term price stability over short-term economic expansion, which remains projected to hold near a 4.7% growth rate.
