The overnight deposit rate was maintained at 19 percent, the overnight lending rate at 20 percent, and the rate of the main operation at 19.50 percent. The discount rate was also kept unchanged at 19.50 percent.
In its statement, the MPC said the decision reflects its assessment of current and expected inflation trends amid what it described as an “unfavorable external environment.”
Globally, the committee noted that economic activity continues to expand at a modest pace as geopolitical tensions, uncertainty over trade policies, and weak demand conditions weigh on growth prospects.
The MPC added that renewed inflationary pressures in several economies have prompted central banks worldwide to maintain a cautious monetary policy stance.
Energy markets have also experienced heightened volatility, with Brent crude oil and natural gas prices rising sharply amid tensions affecting global energy supply routes. Agricultural commodity prices have likewise faced upward pressure due to higher fertilizer costs linked to increased gas prices, in addition to elevated trade-related risk premiums.
Against this backdrop, the committee warned that the global outlook remains exposed to risks stemming from geopolitical escalation, supply chain disruptions, and adverse shifts in international trade policies.
On the domestic front, the MPC said Egypt’s real GDP growth slowed to 5 percent in the first quarter (Q1) of 2026, down from 5.3 percent in Q4 2025. Economic activity is also expected to moderate further in Q2 2026 due to the repercussions of the ongoing regional conflict.
The CBE nevertheless projected the economy to grow by around 5 percent during fiscal year 2025/2026, while noting that economic activity remains below full capacity but is expected to gradually converge toward potential output by the first half of 2027.
According to the committee, the current output gap trajectory suggests that demand-side inflationary pressures are likely to remain contained in the short term under the prevailing monetary policy stance.
Meanwhile, Egypt’s unemployment rate declined to 6 percent in Q1 2026, compared with 6.2 percent in the previous quarter.
Inflation indicators showed a modest easing in April, with annual headline inflation slowing to 14.9 percent from 15.2 percent in March, while annual core inflation declined to 13.8 percent from 14 percent over the same period.
Monthly, headline inflation decelerated mainly due to a sharp decline in food inflation, reversing the seasonal increases recorded in the previous month. The moderation also extended to non-food inflation, suggesting that the impact of the March 2026 energy price hikes was temporary and did not trigger broader inflationary spillovers, the MPC said.
However, the committee expects annual headline inflation to accelerate through Q3 2026, driven partly by unfavorable base effects and supply-side pressures linked to the ongoing regional conflict, including its impact on the exchange rate and fiscal consolidation measures.
The MPC said inflation is likely to remain above the CBE’s target rate of 7 percent (±2 percentage points) on average during Q4 2026 before gradually easing in Q1 2027 and returning to target levels in the second half of 2027.
The committee stressed that maintaining a tight monetary policy stance, alongside continued commitment to exchange rate flexibility and close monitoring of inflation dynamics and expectations, would be essential to steering inflation back toward the target.
Still, it cautioned that the inflation outlook remains vulnerable to upside risks, particularly if the regional conflict persists or if the impact of fiscal consolidation measures on prices proves stronger than expected.
“In view of the above, the MPC has decided to maintain key policy rates,” the statement said, adding that the decision was partly based on the nature of current inflationary pressures and the uncertainty surrounding their future trajectory.
The committee added that the current policy stance provides sufficient room to assess possible second-round effects from ongoing supply shocks and their implications for underlying inflation.
Looking ahead, the MPC said it would continue calibrating monetary policy in line with evolving economic conditions and the balance of risks to ensure inflation converges toward the target level by the second half of 2027.
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