The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) met on Thursday, December 26, and decided to maintain the overnight deposit rate at 27.25 percent, the lending rate at 28.25 percent, and the main operation rate at 27.75 percent. The credit and discount rate also remained unchanged at 27.75 percent.
The Committee announced a revision to its inflation targets, aiming for 7 percent (±2 percentage points) by the fourth quarter of 2026 and 5 percent (±2 percentage points) by the fourth quarter of 2028. This adjustment underscores the CBE’s gradual transition to a full-fledged inflation-targeting framework.
Preliminary data from the third and fourth quarters of 2024 indicate that Egypt’s economy continues to recover, with real GDP growth surpassing the levels recorded in the second quarter. Despite this momentum, GDP remains below its potential, aligning with expectations for further declines in inflation during 2025. The economy is projected to reach its full capacity by the end of the 2025/2026 fiscal year, while inflationary pressures from wages are expected to stay limited due to subdued real wage growth.
Headline inflation in Egypt has shown significant improvement, averaging 26 percent in the fourth quarter of 2024, down from a peak of 38.0 percent in September 2023. This decline follows the stabilization of exchange rate fluctuations, which had previously fueled inflationary pressures. By November 2024, headline inflation had decreased further to 25.5 percent.
Looking ahead, inflation is expected to continue its downward trend starting in the first quarter of 2025. This anticipated decline will be supported by the cumulative effects of previous monetary tightening measures and favorable base effects. Single-digit inflation rates are projected to emerge by the second half of 2026, marking a critical milestone in Egypt’s ongoing economic stabilization and recovery efforts.