Professor Ali Gamal Abdelgawad: Egypt's Interest Rates Remain Unchanged

• بواسطة دكتور علي جمال عبد الجواد
• 2025 Nov 22
• 1185

Prepared by: Professor Ali Gamal Abdel Gawad – Lecturer of Investment and Finance

Egypt's Interest Rates Remain Unchanged: An Analysis of the Central Bank's Decision and its Economic Implications

 

The Monetary Policy Committee of the Central Bank of Egypt decided, in its meeting on Thursday, to maintain key interest rates at their current levels, keeping:

 The overnight deposit rate at 21%

 The lending rate at 22%

 The main operation rate at 21.5%

 The credit and discount rate at 21.5%

 According to the Central Bank's statement, the decision reflects a careful assessment of inflation developments both domestically and globally, in addition to an analysis of the latest economic developments within and outside Egypt.

 First: Global Background… Improved Growth and Persistent Risks

 The statement indicated that global economic growth continues to recover, but this improvement remains surrounded by uncertainty related to international trade policies and ongoing geopolitical tensions.

 Given these circumstances, central banks around the world—in both emerging and developed markets—have adopted a cautious approach to easing their monetary policies to avoid new waves of inflation.

 He also noted that oil prices remained relatively stable, while agricultural commodity prices declined. However, inflationary risks persist, particularly due to potential supply chain disruptions.

 Second: The Egyptian Economy's Performance… Growth Progresses, Unemployment Rises Slightly

 Domestically, the Central Bank explained that data for the third quarter of 2025 indicates a slight increase in the real GDP growth rate to 5.2%, compared to 5% in the second quarter.

 This improvement was supported by activity in the following sectors:

 Non-petroleum manufacturing

 Trade

 Tourism

 Estimates indicate that the Egyptian economy is gradually approaching its maximum capacity, which is expected to be reached by the end of the 2025/2026 fiscal year.

 The labor market, however, witnessed an increase in the unemployment rate to 6.4%, compared to 6.1% in the previous quarter.

 Third: Inflation… Upward Trend and Persistent Risks

 The statement confirmed that the annual headline inflation rate rose to 12.5% ​​in October 2025, compared to 11.7% in September.

 Core inflation also increased to 12.1%, compared to 11.3% in the previous month.

 On a monthly basis, the inflation reading was higher than its usual seasonal levels due to:

 A rise in non-food prices,

 particularly service prices,

 which mitigated the impact of the slowdown in food price inflation.

 The Central Bank indicated the need for a slowdown in monthly inflation increases in order to return to the announced targets.

 According to forecasts, inflation is expected to rise at the end of the fourth quarter of 2025 due to the impact of energy price adjustments, before beginning a downward trend during the second half of 2026.

 However, the central bank warned that inflation expectations remain subject to upside risks, including:

 The potential for escalating geopolitical tensions

 Stable inflation in the services sector

 The possibility that the effects of fiscal consolidation measures may exceed expectations

 Fourth: Why was the interest rate held steady?

 Based on these data, the Committee deemed a wait-and-see approach the most appropriate course of action at this stage, with the aim of:

 Containing inflationary pressures

 Reinforcing price expectations

 Restoring inflation to its downward trajectory

 Avoiding premature monetary easing that could harm financial stability

 The Committee affirmed that it will continue to assess the data at each meeting and will not hesitate to utilize all available tools to maintain price stability, targeting an inflation rate of 7% ± 2% during the fourth quarter of 2026.

 Conclusion

 Maintaining interest rates in Egypt is part of a cautious and sustainable approach adopted by monetary policy in the face of complex domestic and external challenges.

 Despite improved growth rates, rising inflation and increased risks to the global economy necessitate the Central Bank's balancing act between supporting economic activity and maintaining price stability.

 This decision reflects an accurate assessment of the outlook and reaffirms the Central Bank's commitment to achieving monetary stability as a top priority in the coming period.

• الوسوم
• Professor
• Ali
• Gamal
• Abdelgawad:
• Egypt's
• Interest
• Rates
• Remain
• Unchanged
• Professor Ali Gamal Abdelgawad: Egypt's Interest Rates Remain Unchanged