The Central Bank of Egypt’s Monetary Policy Committee is due to meet on Thursday for its first scheduled session of 2026, with analysts widely anticipating a further reduction in interest rates.
The committee will determine the direction of key policy rates, which serve as the main guide for short-term borrowing costs and economic activity. Financial observers expect a cut of between one and two percentage points, following the bank’s previous decision in December to lower rates by one point.
That move brought the overnight deposit rate to 20%, the overnight lending rate to 21%, and the main operation and discount rate to 20.5%. At the time, the central bank said the reduction was aimed at supporting falling inflation while maintaining monetary stability.
Recent figures indicate inflationary pressures may be easing. Annual core inflation fell to 11.2% in January, down from 11.8% the previous month, according to the central bank. However, monthly core inflation rose to 1.2%, suggesting price pressures persist in the short term.
Separate data from Egypt’s official statistics agency showed annual urban inflation declined to 11.9% in January, compared with 12.3% in December. Nationwide inflation also edged lower to 10.1%. Despite the annual slowdown, monthly headline inflation increased to 1.5%, up from 0.1% the month before.
The Central Bank has previously indicated it expects inflation to move closer to its target range of 7%, plus or minus two percentage points, by the final quarter of 2026. However, it cautioned that progress could be slowed by fiscal reforms, persistent non-food price pressures, and ongoing global geopolitical uncertainty.
