Egypt’s Central Bank holds rates steady as it aims to control inflation and maintain economic stability during a period of increasing price pressures. The Monetary Policy Committee decided to leave the deposit rate at 21% and the lending rate at 22%, choosing caution despite earlier expectations of potential cuts.
The decision came after analysts debated whether the bank would continue easing or pause its reductions. Egypt previously lowered interest rates several times earlier in the year, totaling more than 500 basis points. Even with those adjustments, the country still maintains some of the highest real interest rates in global markets, reflecting its strategy to protect price stability.
Recent economic indicators show a modest improvement. Real GDP growth edged upward to 5.2% in the third quarter of 2025, compared with 5.0% in the previous quarter. This momentum was fueled by stronger performances in non-oil manufacturing, retail activity, and the recovering tourism sector. Policymakers believe that by the end of the 2025/26 fiscal year, the economy may reach full productive capacity if current trends continue.
Inflation, however, remains a major challenge. In October, headline inflation climbed to 12.5%, up from 11.7% in September, while core inflation also accelerated. The latest rise reflects increases in regulated fuel prices and newly introduced legislation that allows landlords to adjust rents more frequently. These factors have added fresh pressure on household budgets and business costs.
Looking forward, Egypt’s Central Bank expects inflation to rise slightly toward the end of 2025 as energy-related costs continue filtering through the economy. However, policymakers anticipate a gradual reduction during the latter half of 2026, aiming to return inflation to their long-term target range of 5% to 9%.
Given the current economic landscape, the Central Bank adopted a wait-and-observe approach. Officials emphasized that keeping rates unchanged helps stabilize expectations, reduce inflationary risks, and support the long-term path toward lower and more manageable inflation levels. This strategy reflects Egypt’s careful balancing act: controlling price increases while sustaining economic growth.
