Egypt’s central bank has raised its key interest rates by one percentage point, its first increase since March 2024, in a surprise move aimed at defending the pound and keeping inflation expectations in check.
The Central Bank of Egypt’s Monetary Policy Committee lifted the overnight deposit rate to 20 per cent, from 19 per cent, and the overnight lending rate to 21 per cent, from 20 per cent, at its meeting on Thursday 29 October. The rate on the bank’s main operation and the credit and discount rate both rose to 20.5 per cent.
The decision caught analysts off guard. A Reuters poll of 13 analysts had expected policymakers to leave rates unchanged for a sixth consecutive meeting, after five straight holds through 2026.
The bank said the tightening was intended to anchor inflation expectations and preserve the downward path of inflation, citing an unfavourable external environment and rising uncertainty. downward path of inflation, citing an unfavourable external environment and rising uncertainty. Higher rates make holding Egyptian pounds more attractive and raise the cost of borrowing, which can cool demand — but they also raise financing costs for businesses and households.
Pressure on the currency helped force the move. The Egyptian pound fell to a record low on Monday 26 October, passing 56 pounds to the US dollar for the first time, according to LSEG data. Foreign and Arab investors were reported to have recorded net sales of Treasury bills and bonds of about $664 million that day.
Egypt depends heavily on imports of essentials such as food and fuel, so a weaker pound risks pushing domestic prices higher through import costs — a particular concern at a time of higher international oil prices and renewed regional tensions.
The increase comes even though inflation has been easing. Annual urban inflation slowed to 13.9 per cent in September, from 14.5 per cent in August, while core inflation fell to 14.1 per cent from 14.9 per cent. The central bank has said it aims to bring inflation down towards a 7 per cent target by the fourth quarter of 2027.
The bank expects economic growth to remain broadly stable in the third quarter of 2026, close to the 4.7 per cent recorded in the second quarter. Its next scheduled meeting is on 17 December, and analysts expect monetary policy to stay tight through the rest of 2026 and into early 2027, with any return to rate cuts depending on easing external price pressures and improving inflation expectations.
Sources: Reuters, “Egypt’s central bank makes first rate hike since March 2024” (https://www.tradingview.com/news/reuters.com,2026:newsml_L2N46F17N:0-egypt-s-central-bank-makes-first-rate-hike-since-march-2024/); Central Bank of Egypt Monetary Policy Committee statement of 29 October 2026, as reported by Reuters; Radarr Africa, “Egypt Hikes Rates to 21% as Pound Slumps” (https://radarr.africa/egypt-raises-interest-rates-to-21-as-pound-hits-record-low/).
