Egypt's central bank holds rates steady for fifth time this year
Egypt's central bank monetary policy committee decided to keep the overnight deposit and lending rates unchanged at 19% and 20% respectively, along with the main operation rate at 19.5%. This is the sixth meeting of the year, following a series of cuts totaling 825 basis points since early 2025. The decision comes as annual urban inflation slowed to 14.5% in August, down from 14.9% in July, with food inflation easing to 6.3%.
The central bank's decision to hold rates follows a cumulative 825 basis points of cuts since early 2025, with the last reduction in February. The Fed's recent 25-basis-point hike to a 3.75-4.00% range contrasts with Egypt's pause, reflecting divergent monetary stances amid global energy price shocks.
Annual urban inflation eased to 14.5% in August, driven by food inflation dropping to 6.3%. However, core inflation ticked up to 14.9% from 14.7%, and non-food inflation rose to 19.5%, indicating persistent price pressures beyond food items.
The steady rates may keep borrowing costs elevated for households and businesses, potentially dampening investment and consumption. While slowing food inflation offers some relief, rising core and non-food inflation could squeeze real incomes. The central bank's pause, amid a Fed hike, may pressure the Egyptian pound and complicate external financing. Savers might benefit from stable returns, but overall economic growth could remain constrained until inflation aligns more firmly with targets.