The Central Bank of Egypt headquarters in Cairo in a graphic shared by Asharq Bloomberg after the rate decision, October 29, 2026. Image: Asharq Business (@AsharqBusiness) via X
Egypt's central bank raised its main interest rates by one percentage point on Thursday, its first increase since March 2024, days after the pound hit a record low, Reuters reported.
The Monetary Policy Committee of the Central Bank of Egypt raised the overnight deposit rate to 20 percent and the overnight lending rate to 21 percent, Asharq Bloomberg (@AsharqBusiness) reported. It was the first rise since March 6, 2024, when the bank raised rates sharply and let the pound float as part of a deal with the International Monetary Fund.
The bank said the decision was taken "in light of an unfavorable external environment and rising uncertainty," and that it aims "to anchor expectations and preserve the disinflation path," CNN Arabic reported, quoting the statement. The main operation rate and the discount rate were both raised to 20.5 percent. The bank said economic growth should stay broadly stable in the third quarter, close to the 4.7 percent recorded in the second quarter, according to Reuters.
The move surprised most analysts, who had expected the bank to keep rates unchanged. A Reuters poll of 13 analysts published on Tuesday had predicted a hold for a sixth meeting in a row, Reuters reported. "Most analysts we spoke to earlier this week expect the committee to keep the overnight deposit rate at 19 percent," the Egyptian media consultant Hamed Ezzeldin (@hamedezzeldin) wrote on Thursday morning, hours before the decision. The bank had held rates steady at its previous five meetings, the financial commentator Mohammad Hassan (@mhmd7sn) noted.
Annual urban inflation eased to 13.9 percent in September from 14.5 percent in August, but higher energy prices and the weaker pound have raised fears of a new wave of price increases, Asharq Bloomberg said. The pound hit a record low of 56 to the dollar on Monday, Reuters reported, citing LSEG data.
"The paradox is that inflation fell," Mohammad Hassan wrote. "The answer lies in fear of what is coming." He said companies would face higher borrowing costs and the government a heavier burden on its debt, while saving would become more attractive than investing. "How do you protect the value of the pound from inflation without strangling growth with higher financing costs?" he asked, adding that the first rise in 2022 turned out to be the start of a long series of increases.
S&P Global Market Intelligence expects the central bank to keep tightening for the rest of 2026 and into early 2027, the economic news site Economy Plus (@EconomyPlusAR) reported. BMI, a Fitch Solutions company, expects another one point increase in December, its Middle East and North Africa analyst Abdalla Saleh told Forbes Middle East, saying the decision appeared focused on the exchange rate.
Hany Genena, head of research at Al Ahly Pharos, called the hike "a bold and strong step" aimed at cooling demand for the dollar and steadying the pound, the Egyptian business site Elfolos reported on Friday, in Mereja's translation. He said Treasury bill yields had already risen by about one percentage point. Banks quoted the dollar at around 56 pounds on Thursday evening after the decision, the site said.
The Egypt Technocrats Party (@egy_technocrats) said the decision would put new pressure on borrowing and on the public debt, amid fears over inflation and the fall of the pound.
The central bank said the increase is meant to protect the downward path of inflation, according to its statement carried by CNN Arabic.