Cairo: The Central Bank of Egypt's (CBE) Monetary Policy Committee (MPC) announced on Thursday its decision to keep key interest rates unchanged. The committee held the overnight deposit rate at 24 percent, the overnight lending rate at 25 percent, and the rate for the main operation at 24.5 percent. The discount rate also remains at 24.5 percent.
According to State Information Service Egypt, this move reflects the MPC's assessment of both domestic and global economic conditions. It aims to support the ongoing disinflation path while ensuring macroeconomic stability. The decision comes against the backdrop of a complex international environment marked by subdued global growth forecasts. The persistence of trade policy uncertainty and renewed geopolitical tensions have prompted a more cautious global monetary stance, particularly among both advanced and emerging market central banks.
These conditions have contributed to heightened volatility in commodity prices, notably in oil markets, where fluctuations have been driven by supply dynamics and softening global demand, the committee explained. Meanwhile, key agricultural commodity prices have eased slightly, supported by favorable seasonal factors. Nonetheless, upside risks to global inflation persist, fueled by climate-related shocks and potential disruptions in trade flows.
On the domestic front, Egypt's economy continues to show signs of recovery. According to the CBE's nowcast, real GDP growth for the second quarter of 2025 is expected to remain near the 4.8 percent level recorded in the first quarter of 2025. This is significantly higher than the 2.4 percent observed in the second quarter of 2024. The gradual closing of the output gap indicates improving economic utilization, with activity projected to reach its full potential by the end of the current FY2025/2026.
This economic rebound has not been accompanied by excessive demand-side inflationary pressures, largely due to the tight monetary stance maintained by the CBE. Annual headline inflation dropped to 15.3 percent in the second quarter of 2025, down from 16.5 percent in the first quarter. This downward trend continued into June, with headline inflation declining to 14.9 percent and core inflation falling to 11.4 percent. Monthly inflation readings for June also turned negative, with headline and core figures at -0.1 percent and -0.2 percent, respectively-largely reflecting falling food prices and stable non-food inflation components.
These developments have improved inflation expectations, with annual headline inflation now expected to stabilize around current levels through the remainder of 2025 before declining steadily in 2026. However, the CBE notes potential risks from fiscal consolidation efforts, including changes to administered prices and tax reforms such as recent value-added tax amendments, which may influence inflation dynamics in the medium term.
Given the balance of risks and the need to anchor inflation expectations, the MPC concluded that holding rates steady is appropriate. The committee emphasized its commitment to data-driven decision-making and stated it will assess the pace and scale of any future policy adjustments on a meeting-by-meeting basis. The CBE reiterated its mandate to achieve price stability, reaffirming its medium-term inflation target of seven percent (± two percent) by the fourth quarter of 2026. The MPC stands ready to use all available monetary tools to steer inflation towards this target and ensure macroeconomic resilience.