Egypt interest rate hike: CBE lifts key rates 100bps to 20%
Egypt interest rate hike: the Central Bank of Egypt raised key rates by 100bps to 20%, its first increase since March 2024, as the pound hit a record low.
Layla Al Mansoori
◆31 October 2026
◆5 min read
The Central Bank of Egypt increased key interest rates by 100 basis points on Thursday, 29 October, taking its overnight deposit rate to 20% from 19%. The increase is the first since March 2024.
The Egypt interest rate hike surprised markets. Reuters had published a poll of 13 analysts on Tuesday that predicted the Monetary Policy Committee would keep rates steady for the sixth meeting in a row.
The committee also increased the overnight lending rate to 21% from 20%. The main operation rate and discount rate each increased to 20.5% from 19.5%, the bank said in a statement.
Why the Central Bank of Egypt tightened
The central bank cited difficult external conditions and high uncertainty in its statement. The bank said that the hike would anchor inflation expectations and safeguard the disinflation process.
Annual urban headline inflation slowed to 13.9% in September from 14.5% in August, official data from CAPMAS showed. Core inflation stood at 14.1%, The Rio Times reported. Both readings are far above the central bank’s target of 7%, plus or minus two percentage points.
The committee expects economic growth to remain broadly stable in the third quarter of 2026, close to the 4.7% rate recorded in the second quarter, according to Investing.com’s report on the decision.
The hike reverses the bank’s earlier easing. The committee lowered borrowing costs by one percentage point in February 2026. It kept rates on hold at its April, May, July, August and September meetings.
Pressure on the Egyptian pound
The measure comes after a challenging week for Egyptian assets. The dollar had traded above EGP56 at the central bank earlier in the week for the first time. That was a record low for the pound versus the dollar, surpassing the previous low of EGP54.73 reached on 7 April, Enterprise said.
The slide has been rapid. The dollar broke EGP55 at the central bank on Thursday, 22 October, hit EGP55.89 on Sunday and edged above EGP56 early this week, news outlet Enterprise said. That amounts to roughly $18 for 1,000 Egyptian pounds.
Equities came under pressure as well. Egypt’s benchmark EGX30 index fell 3.56% to around 49,200 points at the close on Sunday, Enterprise said.
A higher overnight deposit rate boosts returns on holding pounds, which can slow outflows from local debt and ease pressure on the currency. It also makes credit more expensive across the economy.
What the Egypt interest rate hike means for business
Higher policy rates increase the cost of borrowing for Egyptian businesses and households even as banks in the country attract new investor interest. Banque du Caire priced its IPO at EGP5.30 a share earlier this month, raising EGP36.4bn (around $650m).
It also follows the recent upgrade of Egypt’s sovereign credit rating to B3 by Moody’s. For Gulf investors, who have large holdings in Egyptian banking, real estate and infrastructure, a stronger defence of the currency could help shore up confidence in the market.
After the Egypt interest rate hike, higher deposit rates should also pass through to certificates of deposit and savings accounts at state-owned and private banks, which often reassess their pricing soon after an announcement. Egypt, the most populous country in the Arab world, has continued to be one of the largest recipients of Gulf capital, whether in banking, real estate, logistics or energy.
Exporters and firms with dollar income stand to benefit from the weaker pound, while importers and companies with local-currency debt will pay more. Banks will probably also reprice deposits and loans in the coming days. The central bank said it would remain focused on price stability and maintaining the disinflation process while external uncertainty remains.
The committee said future decisions will take into account data on inflation and economic activity as well as domestic and international financial developments. The MPC’s next and final meeting of 2026 is scheduled for 17 December, according to Zawia3. The full statement is published on the Central Bank of Egypt website.
