Central Bank of Egypt Delivers Surprise Rate Hike

The Central Bank of Egypt raised its key interest rate by 100 basis points to 20% at its October 2026 meeting, surprising analysts who expected it to remain uchanged. This marks the first rate hike since March 2024. The decision aims to keep inflation expectations anchored and safeguard the disinflation trajectory, amidst challenging external conditions and heightened uncertainty. Egypt's annual urban inflation eased for the second straight month to 13.9% in September 2026 from 14.5% in August, but remains well above the central bank's 7% ±2% target range.

The Central Bank of Egypt kept its key interest rate unchanged at 19% at its September 2026 meeting, in line with market expectations amid still-high inflation and regional and energy shocks. This marked the sixth consecutive meeting with rates on hold. The CBE said the global outlook remains uncertain due to geopolitical tensions, tighter financial conditions, and renewed supply chain disruptions. Domestic economic activity continued to moderate due to regional tensions, while the projected output gap suggests limited demand-side inflationary pressures in the short term. Annual headline inflation eased marginally, while core inflation remained relatively stable. The CBE revised its inflation forecast downward, but said risks remain tilted to the upside amid renewed regional hostilities. It added that the current degree of policy restrictiveness should help buffer these risks and preserve the projected disinflation path.

The Central Bank of Egypt kept its key interest rate unchanged at 19% at its August 2026 meeting, in line with market expectations. This marked the fifth consecutive meeting with rates on hold, extending a pause in the almost year-long monetary easing cycle as the Middle East conflict increased pressure on the Egyptian pound and fuel import costs. Headline inflation accelerated to 14.9% in July, after easing through June. Meanwhile, economic activity is estimated to moderated in the second quarter of 2026. The central bank is expected to keep rates unchanged through the end of 2026 before resuming its easing cycle in Q1 2027. Policymakers expect inflation to return to the 7% ±2% target range in the second half of 2027. Economic growth is expected to average 5% in FY 2025/26, with output remaining below potential, though expected to gradually converge toward potential by H2 2027. Looking ahead, policymakers reiterated their commitment to preserve price stability.