Egypt’s central bank hikes 100 basis points as the IMF sets a December deadline

The Central Bank of Egypt’s Monetary Policy Committee raised policy rates by 100 basis points on Thursday 29 October, taking the overnight deposit rate to 20.00%, the overnight lending rate to 21.00% and the main operation and discount rates to 20.50%. It is the first increase since March 2024, and Reuters, AFP and the Egyptian domestic press all described it as a surprise against analyst expectations of a hold. The published MPC statement, carried by the Saudi Press Agency and Youm7, said the committee resolved to raise base return rates “by 100 basis points.” Al Arabiya rendered the framing as a response to “an unfavourable external environment and escalating uncertainty”; the bank’s English text, as reproduced by TradingEconomics, said the move “aims to keep inflation expectations anchored and safeguard the disinflation trajectory, amidst challenging external conditions and heightened uncertainty.”

The decision sits oddly against the headline price data. Annual urban inflation slowed to 13.9% in September from 14.5% in August, and non-food inflation eased to 18.0% from 19.5%, per the CBE’s 11 October report. But monthly urban CPI rose 1.3% in September against 0.1% in August — CAPMAS attributed most of the jump to a 15.1% rise in vegetable prices. Separately, Reuters reported on 29 October that an IMF staff mission had spent the week in Cairo seeking a staff-level agreement on the final review of the $8bn Extended Fund Facility, with the Fund targeting Executive Board clearance by mid-December and the talks centred on “maintaining tight monetary policy” and a fiscal consolidation plan. Neither institution linked the two events.

Assessment: The sequencing is suggestive and unproven: the Fund says it wants tight money, the central bank tightens the same day, and neither says the other’s name. Treat the connection as inference. Treat the currency explanation the same way — Masrawy and Zawia3 tie the hike to the pound’s record low, but the pound appears nowhere in the CBE’s quoted language. Note also how badly this was aggregated. TradingEconomics ran it under a headline reading “Egypt Cuts Rates by 100Bps” and wrote that the MPC “slashed” the deposit rate; Amwal Al Ghad called it a shift “to support growth amid easing inflation pressures.” Two outlets reversed the direction of Egyptian monetary policy within hours of an unambiguous statement. Readers pricing Egypt off aggregator feeds are pricing noise.