In a meeting on Thursday, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to maintain the overnight deposit and lending rates, along with the main operation rate, at 27.25%, 28.25%, and 27.75%, respectively.

 Additionally, the credit and discount rate was held steady at 27.75%.

The committee also extended the inflation target timeline, setting objectives of 7% (±2 percentage points) by Q4 2026 and 5% (±2 percentage points) by Q4 2028, reflecting the bank’s gradual shift toward a comprehensive inflation-targeting framework.

According to the committee's report, the preliminary indicators for Q3 and Q4 of 2024 suggest a continued recovery in Egypt's economic activity, with real GDP growth accelerating compared to Q2 2024.

 Despite this progress, real GDP remains below its potential, supporting expectations of further inflation declines in 2025.

The economy is projected to reach its full potential by the end of FY 2025/2026. Wage-induced inflationary pressures remain limited due to weak real wage growth.

Egypt’s headline inflation has shown signs of decline, averaging 26% in Q4 2024, compared to the CBE’s 7% (±2 percentage points) target.

Exchange rate fluctuations also pushed inflation higher, peaking at 38.0% in September 2023 before dropping to 25.5% in November 2024.

Looking ahead, inflation is expected to decline significantly from Q1 2025 as the cumulative effects of monetary tightening and a favorable base effect take hold, with single-digit inflation likely by H2 2026.