The overnight deposit rate was maintained at 19 percent, the overnight lending rate at 20 percent, and the main operation rate at 19.5 percent. The discount rate was also held steady at 19.5 percent.
The decision reflects the MPC’s assessment of recent inflation developments and the evolving economic outlook since its previous meeting, particularly in light of escalating geopolitical tensions in the region.
Globally, the CBE attributed its move to the economic growth prospects that have weakened amid ongoing conflict, which has disrupted trade flows and driven up energy and agricultural commodity prices. Rising freight and insurance costs have added further inflationary pressures, prompting central banks worldwide to adopt a cautious, data-dependent approach and slow the pace of monetary easing.
Domestically, the CBE expects Egypt’s real GDP growth to ease to around 4.8–5.0 percent in the first quarter (1Q) of 2026, compared to 5.3 percent in the fourth quarter (4Q) of 2025. While non-petroleum manufacturing, trade, and communications continue to support economic activity, the central bank revised its full-year growth forecast for FY 2025/2026 down to 4.9 percent, from 5.1 percent projected in February.
Inflationary pressures have also intensified. Annual headline inflation rose to 13.4 percent in February, up from 11.9 percent in January, while core inflation increased to 12.7 percent from 11.2 percent. The uptick exceeded typical seasonal trends, driven largely by increases in education costs and higher food prices during Ramadan.
The CBE noted that recent geopolitical developments have materialised upside risks to inflation, interrupting its previously declining trajectory. External shocks, including higher global energy prices and a shift in investor sentiment away from emerging markets, have contributed to exchange rate depreciation and added pressure on domestic prices.
As a result, the central bank warned that its inflation target of 7 percent (±2 percentage points) by 4Q 2026 is increasingly exposed to upside risks, particularly if the regional conflict persists or if the impact of fiscal consolidation measures proves stronger than expected.
In this context, the MPC opted to pause its monetary easing cycle and maintain a tight policy stance, aiming to anchor inflation expectations and contain price pressures. The Committee reiterated that future policy decisions will remain data-driven and responsive to shifts in inflation and economic conditions, affirming its readiness to act to ensure price stability over the medium term.
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