Central Bank of Egypt Keeps Interest Rates Unchanged: Deposit at 19% and Lending at 20%

The Central Bank of Egypt kept key interest rates unchanged at its latest meeting, maintaining the overnight deposit rate at 19% and the overnight lending rate at 20%, while the main operation rate remained stable at 19.5%.

This decision comes as part of the Central Bank's commitment to anchoring price stability and curbing high inflation, amid expectations that inflation will gradually decrease over the coming months as price pressures subside.

The Central Bank had sharply raised interest rates during 2023 and 2024 to contain rising inflation, hinting at the possibility of lowering them later once inflationary pressures subside to more sustainable levels.

Holding interest rates at these high levels puts pressure on equity valuations on the Egyptian Exchange, making fixed-income instruments such as deposits more attractive compared to equities.

What do these terms mean?

Overnight Deposit Rate: The interest rate paid by the Central Bank to commercial banks for depositing their excess funds overnight, serving as the floor for market interest rates.

Overnight Lending Rate: The interest rate charged by the Central Bank to commercial banks for lending them liquidity overnight, representing the ceiling for market interest rates.

Main Operation Rate: The rate at which the Central Bank conducts its open market operations, serving as the primary benchmark for monetary policy and typically falling between the deposit and lending rates.