Egypt's central bank raises its key rates by 100 basis points
The overnight deposit rate goes to 20 per cent from 19 after a hold in September, with annual inflation at 13.9 per cent.
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Egypt's Monetary Policy Committee raised the central bank's key rates by 100 basis points on 29 October, the bank said, lifting the overnight deposit rate to 20.0 per cent and the overnight lending rate to 21.0 per cent.
The rate of the main operation and the discount rate both rose to 20.5 per cent. The bank's rates page shows the new levels as effective from 1 November 2026, per the Central Bank of Egypt's MPC decisions page. The decision follows a hold at the previous meeting, when the committee held the deposit rate at 19.00 per cent, the lending rate at 20.00 per cent and the main operation and discount rates at 19.50 per cent, as Bnok24 reported from the 24 September statement.
The committee's stated reasons
The release gives the reasons as "challenging external conditions and elevated uncertainty", and says the move aims to keep expectations anchored and safeguard the disinflation trajectory. It calls the decision preemptive. The committee said risks and uncertainty have become more pronounced since the previous meeting, with risk-off sentiment adding to global economic and financial volatility.
The release points to a regional conflict that has proved more persistent than first envisaged, and to its spillovers into global energy and other commodity prices, which it says fuel imported inflation. It lists tighter global financial conditions and a higher-than-expected pass-through of domestic fiscal consolidation measures as further risks to the inflation forecast.
The bank restated its target of 7 per cent, plus or minus 2 percentage points, on average in the fourth quarter of 2027. The September statement, as Bnok24 summarised it, described convergence toward the same target during the second half of 2027, and said the balance of risks was tilted to the upside because of renewed regional hostilities. That statement also revised the bank's inflation forecast lower, and called the existing stance sufficiently tight.
Inflation and growth in the release
The release says monthly headline and core inflation both accelerated in September compared with August, to 1.3 per cent and 0.8 per cent. It attributes the pick-up in core inflation to higher core food prices and seasonal dynamics. Annual headline and core inflation eased to 13.9 per cent and 14.1 per cent, which the bank links to subdued monthly readings from June through August.
The statistics agency's own figures point the same way. The Central Agency for Public Mobilisation and Statistics put annual urban inflation at 13.9 per cent in September, down from 14.5 per cent in August, and monthly inflation at 1.3 per cent against 0.1 per cent a month earlier, driven mainly by a 15.1 per cent rise in vegetable prices, Daily News Egypt reported. It also reported annual headline inflation for Egypt as a whole at 12.8 per cent, up from 12.7 per cent.
On growth, the committee's nowcast has real GDP expanding at a rate broadly stable in the third quarter of 2026, near the 4.7 recorded in the second quarter. The release says output remains below potential and is expected to converge toward full capacity by the second half of 2027, so demand-driven inflationary pressure should stay limited in the short term.
What the new corridor means for real rates
With annual urban headline inflation at 13.9 per cent, the new 20.0 per cent deposit rate gives a real rate of 6.1 percentage points, a Data Desk calculation from the two figures. Our comparison of real policy rates in six emerging markets covered Egypt before the move. Our earlier report on the September meeting, Egypt's central bank holds rates as annual inflation eases, records the position the committee has now left.
Set against the September decision, every one of the four rates moved by the same 100 basis points, so the one point gap between the deposit and lending rates is unchanged, as is the half point gap between the deposit rate and the main operation. The release does not discuss the exchange rate or the Treasury bill market, and it gives no date for the next meeting.
The release sets no path for further moves. The committee said it will keep evaluating its stance on evolving economic conditions, the forecast inflation path and the balance of risks, and that it remains committed to price stability and will adjust its policy stance as necessary so that inflation returns to target in the near term.