Egypt's central bank holds interest rates steady at 27.25%
The Central Bank of Egypt (CBE) decided to keep its key interest rate unchanged at 27.25% during its May monetary policy meeting. The decision comes as inflation continues its downward trajectory, reaching 25.3% in April 2026 — a significant improvement from the peak of 33% recorded in mid-2024.
The Egyptian pound has remained relatively stable around 50.5 against the US dollar, reflecting improved foreign exchange conditions following the Ras El-Hekma deal and increased remittances. However, the CBE noted that core inflation remains elevated, and further rate cuts will depend on sustained improvement in price stability.
For businesses and consumers, the hold decision means borrowing costs remain high but are expected to gradually decrease over the coming quarters if inflation continues its decline.
The CBE's decision to hold rates at 27.25% despite declining inflation reflects a cautious approach — waiting for sustained proof that price stability is permanent before easing. The stability of the EGP around 50.5 suggests the macro stabilization is real, but core inflation remains too elevated for comfort.
Why is the CBE keeping rates so high if inflation is falling?
Central banks typically keep rates elevated until they're confident inflation is sustainably heading toward their target (usually around 5-9% for emerging markets). Premature cuts risk reigniting inflation. The CBE is being cautious to ensure the downward trend is permanent.