Egypt Holds Interest Rates as Inflation Pressures Re-Emerge

BREAKING NEWSNovember 20, 2025 at 11:06 PM UTC

TLDR

The Central Bank of Egypt left its key interest rates unchanged on Thursday, keeping the overnight deposit rate at 21% and the lending rate at 22%
The decision followed mixed analyst expectations, with some forecasting a rate cut of as much as 100 basis points after several reductions earlier in the year
The central bank expects inflation to increase slightly toward the end of 2025 before easing gradually in the second half of 2026

The Central Bank of Egypt left its key interest rates unchanged on Thursday, keeping the overnight deposit rate at 21% and the lending rate at 22%.

The decision followed mixed analyst expectations, with some forecasting a rate cut of as much as 100 basis points after several reductions earlier in the year. Egypt cut rates by a total of 525 basis points between April and August, yet its real interest rates remain among the highest in the world.

The bank said economic activity continued to improve, with real GDP growth rising to 5.2% in Q3 2025 from 5.0% in the previous quarter. Growth was supported by stronger performance in non-oil manufacturing, trade and tourism. Policymakers expect the economy to reach full capacity by the end of fiscal year 2025/26.

Headline inflation climbed to 12.5% in October from 11.7% in September, while core inflation also accelerated. Higher government-set fuel prices and a new law allowing faster rent increases contributed to the rise.

The central bank expects inflation to increase slightly toward the end of 2025 before easing gradually in the second half of 2026 toward its 5% to 9% target range. For now, the Monetary Policy Committee chose to keep rates steady to anchor expectations and limit further inflation risks.

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Key Takeaways

Egypt’s decision to pause its easing cycle reflects a shift in balance between supporting growth and keeping inflation in check. After front-loaded rate cuts earlier in the year, pressures from fuel price adjustments, rent reforms and underlying demand have pushed inflation higher, complicating the case for further near-term easing. With real rates still elevated by international standards, the central bank has room to wait, especially as it tries to manage expectations in an environment where price shocks can quickly translate into broader inflation. GDP growth remains steady, supported by non-oil sectors, and policymakers’ view that the economy will reach full capacity by FY 2025/26 suggests limited urgency to stimulate through additional cuts. The central bank’s forward guidance points to a cautious stance: inflation may rise slightly through late 2025 before easing as base effects and supply adjustments take hold. The pause signals a commitment to restoring broader price stability before resuming a more accommodative policy path.

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