Egypt’s central bank opted for caution on Thursday, leaving its benchmark interest rates unchanged as policymakers weighed slowing inflation against mounting geopolitical uncertainty across the region.
The Central Bank of Egypt maintained the overnight deposit rate at 19% and the lending rate at 20%, signaling that officials remain wary of external shocks despite recent signs of easing price pressures.
In its policy statement, the bank said the decision reflected its reading of both current and future inflation trends, particularly at a time when global and regional conditions remain unstable.
The move came largely in line with market expectations. Economists had broadly anticipated a pause in rate adjustments, with concerns growing that escalating tensions tied to the U.S.-Israeli conflict involving Iran could feed fresh inflationary pressures into emerging markets, including Egypt.
While inflation has shown some moderation, it still sits well above the central bank’s long-term comfort zone. Annual urban consumer inflation slowed to 14.9% in April from 15.2% in March, marking another gradual decline but remaining far above the bank’s target range of 5% to 9% by late 2026.
Core inflation — which excludes volatile items such as food and fuel — also edged lower, easing to 13.8% in April from 14% a month earlier.
The central bank also flagged signs of softer economic momentum. Egypt’s real GDP growth cooled to 5% during the first quarter of 2026, down from 5.3% in the previous quarter. Officials expect growth to weaken further in the second quarter as regional instability continues to weigh on economic activity and investor sentiment.
The latest decision suggests Cairo’s policymakers are choosing stability over aggressive easing for now, preferring to keep borrowing costs elevated until inflation moves closer to target and external risks become less volatile.
