Egypt's Central Bank Holds Interest Rates Steady

The Central Bank of Egypt kept its key interest rate unchanged at 19% at its May 2026 policy meeting, matching market expectations. The decision followed a rise in annual headline inflation to 13.4% in February from 11.9% in January, while core inflation accelerated to 12.7% from 11.2%, driven by higher education costs and seasonal food price increases during Ramadan. The central bank warned that rising global energy and agricultural prices, exchange-rate volatility, and fiscal adjustment measures could slow the disinflation process and threaten its Q4 2026 inflation target. Meanwhile, Egypt lowered its FY2025/26 GDP growth forecast to 4.9% from 5.1%, citing weaker external demand and regional tensions. Globally, policymakers noted that escalating conflicts and supply-chain disruptions continue to pressure inflation and weaken growth prospects.

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%.