Egypt Central Bank Holds Interest Rates Amid Regional Conflict

The Central Bank of Egypt kept its key policy rates unchanged at 19% on April 2, 2026, pausing its easing cycle amid regional conflict. The Monetary Policy Committee aims to keep inflation expectations anchored and restore disinflation. Globally, economic growth has moderated as escalating conflict heightened uncertainty and disrupted trade. Energy and agricultural commodity prices surged on supply disruptions, renewing upward inflation pressure worldwide. The conflict realized upside inflation risks, disrupting stable conditions and prolonging disinflation. A global energy shock and risk-off sentiment shifted the economic outlook, particularly for emerging markets. Domestically, fiscal consolidation and exchange rate depreciation have absorbed the energy shock, mitigating impact on activity. However, the inflation path and the CBE's 7 percent target for Q4 2026 face heightened upside risks if conflict persists or fiscal pass-through exceeds expectations.

The Central Bank of Egypt slashed key interest rates by another 100 bps to 19% on February 12, 2026, bringing borrowing costs to the lowest level since July 2023, amid slowing inflation and a strengthening currency. The second consecutive rate cut was widely expected, with most analysts anticipating a 100-basis-point reduction. The latest data showed annual urban inflation eased to a four-month low of 11.9% in January 2026 from 12.3% in the month earlier; while core inflation decelerated for the second month to a five-month low of 11.2%. Egypt’s pound has appreciated around 2% so far this year and is currently trading at 46.8 per US dollar, its highest level since May 2024. The discount rate was also cut to 19.5%. In addition, the CBE Board of Directors reduced the required reserve ratio (RRR) for commercial banks from 18% to 16%.

The Central Bank of Egypt lowered key interest rates by 100 bps on Thursday, 25 December 2025, signaling growing confidence that inflationary pressures are easing after a prolonged period of tight monetary policy, bringing rates to their lowest level since January 2024. The latest data showed annual urban inflation eased to 12.3% in November, down from October’s three-month high of 12.5%, mainly driven by softer increases in food prices (0.7% vs 1.5% in October), the lowest since April 2021. The central bank targets inflation of around 5–9% in Q4 2026, while expecting real GDP growth to reach around 5%. The Monetary Policy Committee also slashed the overnight deposit rate to 20.0%, the overnight lending rate to 21.0%, and the main operation rate to 20.50%, while the discount rate was reduced to 20.50%. Egypt has maintained elevated borrowing costs for much of the past two years as it sought to rein in inflation driven by currency devaluations, supply shocks, and fiscal pressures.