UPDATE: Egypt’s central bank cuts key interest rates by 100bps in first 2026 MPC meeting

Egypt’s central bank on Thursday lowered key interest rates by 100 basis points, marking the first monetary policy decision of 2026 and signaling a cautious shift to support growth amid easing inflation pressures.

The Monetary Policy Committee (MPC) cut the overnight deposit rate to 19.0 percent, the overnight lending rate to 20.0 percent, and the main operation rate to 19.5 percent. The discount rate was also reduced to 19.5 percent.

“In view of the above, the MPC judges that a 100-basis-point cut in key policy rates, complemented with a two-percentage point reduction in the RRR, is consistent with upholding a monetary policy stance conducive to achieving the inflation target.” MPC said in its statement.

In addition, the Central Bank of Egypt’s (CBE) board reduced the required reserve ratio for commercial banks from 18 percent to 16 percent, a me expected to increase liquidity in the banking system and encourage lending.

“The reduction in the RRR aims to safeguard the effectiveness of monetary policy transmission through ensuring effective pass-through of CBE decisions to money markets and the broader economy by appropriately calibrating liquidity conditions within the banking system.” MPC statement read.

The central bank said the decisions reflect its assessment of current inflation trends and the evolving economic outlook since the previous meeting, suggesting a more accommodative stance while maintaining price stability.

“The Committee will continue to remain vigilant and stands prepared to adjust its policy instruments as needed to fulfil its price-stability mandate, steering inflation toward the CBE target of 7 percent (± 2 p.p.) in Q4 2026, on average.”

Attribution: Amwal Al Ghad English