Central Bank of Egypt Raises Rates to Combat Inflation

The Central Bank of Egypt (CBE) increased key interest rates by 100 basis points last week, citing a need to anchor inflation expectations. The Monetary Policy Committee stated the decision aims to keep inflation on a downward path to reach a 7% target by the fourth quarter of 2027.

April 2, May 21, July 9, August 20, and September 24

The Monetary Policy Committee held five consecutive meetings throughout 2026 where it chose to maintain existing interest rates. During this period, the committee monitored both domestic economic stability and global market conditions before opting to shift policy.

Last Thursday

The committee implemented a 100-basis-point hike. This adjustment set the overnight deposit rate at 20%, the overnight lending rate at 21%, and both the main operation and discount rates at 20.5%. Officials described this as a pre-emptive measure against an unfavorable external environment.

Current Economic Outlook

The CBE reported that domestic real GDP growth remained stable at approximately 4.7% in the third quarter of 2026, supported by manufacturing and services. While global trade shows resilience, the committee noted that geopolitical tensions and rising commodity prices, particularly in energy and agriculture, continue to create uncertainty. The bank expects to keep monetary conditions restrictive to limit demand-driven inflation in the near term.

Why it matters: This rate hike signals the Egyptian government’s commitment to prioritizing inflation control over immediate growth incentives. For the Middle East, this reflects a broader trend of regional central banks tightening policy to counter global supply chain disruptions and volatile commodity costs.