Egypt's central bank holds rates, doubles its inflation outlook

Summary

The Central Bank of Egypt held its policy rates — overnight deposit 19%, lending 20% — for a second straight meeting, and lifted its 2026 inflation outlook to 16-17% from a prior 11%, a near-doubling it blamed on supply-side pressure from "ongoing regional conflict," exchange-rate moves and fiscal adjustment. The CBE expects inflation to accelerate through Q3 2026. Annual urban inflation was 14.6% in May, with food and beverages up 7.6% — the biggest monthly rise in a year — and housing and utilities up 40.4% as electricity costs climb, tying directly to the energy import scramble. The pound weakened toward 53 to the dollar. The revision reverses earlier expectations of 4-6% in rate cuts this year — pressure on Abdel Fattah El Sisi's economy that the IMF program and Gulf backing are meant to contain.

By the numbers

• 19% / 20% — held overnight deposit / lending rates (second straight hold).
• 16-17% — revised 2026 inflation outlook, from 11%.
• 14.6% — annual urban inflation in May; food and beverages +7.6%.
• 40.4% — housing and utilities inflation, on rising electricity costs.
• ~53/$ — pound weakening against the dollar.

Why it matters

The doubled forecast is the war and energy shock landing in the cost of living. With rate cuts now delayed, Egyptians face a longer squeeze, the IMF program's inflation assumptions slip, and Sisi's economic story — that diplomacy buys stability — gets harder to tell at the checkout.

What to watch

• Whether inflation peaks in Q3 as the CBE projects, or overshoots.
• The pound's trajectory and any new currency pressure.
• The next IMF review and its read on the inflation path.