The Overnight Lending Rate in Egypt remains steady at 22.00% as of November 2025, unchanged from October but significantly lower than the 28.25% peak recorded in April 2025. This stability reflects the Central Bank’s cautious approach amid persistent inflationary pressures and external vulnerabilities. The rate is still elevated by global standards, underscoring Egypt’s ongoing challenges in balancing growth and price stability.

Drivers this month

• Inflation remains elevated at approximately 30% YoY, pressuring monetary policy to stay tight.
• Currency depreciation risks persist, prompting the Central Bank to maintain high rates.
• Fiscal consolidation efforts have slowed, limiting room for monetary easing.

Policy pulse

The current rate sits well above the Central Bank’s informal inflation target range of 7-9%, signaling a continued priority on inflation control over growth stimulation. The unchanged rate suggests a wait-and-see stance amid mixed signals from economic data.

Market lens

Immediate reaction: The EGP/USD pair depreciated 0.30% within the first hour post-announcement, reflecting market disappointment at the lack of rate cut. Short-term yields on government bonds edged up 5 basis points, indicating cautious investor sentiment.

Core macroeconomic indicators provide essential context for the Overnight Lending Rate’s trajectory. Egypt’s GDP growth slowed to an estimated 2.50% YoY in Q3 2025, down from 3.10% in Q2, impacted by tighter financial conditions and subdued private investment. Inflation remains the dominant concern, with headline CPI at 30.20% YoY in October, driven by food and energy prices.

Monetary Policy & Financial Conditions

The Central Bank’s policy stance remains restrictive. The overnight rate at 22% is well above the 12-month average of 24.50% seen earlier this year but down from the 28.25% peak in April. Lending conditions remain tight, with commercial banks cautious on credit growth, which slowed to 5% YoY in October from 7% in July.

Fiscal Policy & Government Budget

Fiscal deficits have narrowed slightly to 7.80% of GDP in FY2025, aided by subsidy reforms and improved tax collection. However, public debt remains high at 90% of GDP, limiting fiscal space. The government’s cautious spending approach supports monetary policy’s inflation fight but restrains growth.

External Shocks & Geopolitical Risks

Global commodity price volatility and regional geopolitical tensions continue to pressure Egypt’s external accounts. The current account deficit widened to 4.50% of GDP in Q3, driven by higher import costs and slower tourism recovery. These external risks justify the Central Bank’s reluctance to ease rates prematurely.

Drivers this month

• Inflation persistence limits further rate reductions.
• Exchange rate volatility remains a key concern.
• Fiscal consolidation progress remains uneven.

Policy pulse

The rate’s plateau suggests the Central Bank is balancing inflation control with the need to support growth. The current stance is consistent with a gradual approach to monetary easing, contingent on inflation trends and external developments.

Market lens

Immediate reaction: Government bond yields rose modestly by 5 basis points, while the EGP weakened slightly against the USD, reflecting market caution. Breakeven inflation rates remain elevated, signaling ongoing inflation expectations.

Looking ahead, the Overnight Lending Rate’s trajectory will depend on inflation dynamics, fiscal policy, and external shocks. Three scenarios emerge:

Bullish scenario (30% probability)

• Inflation moderates faster than expected, dropping below 15% by mid-2026.
• Fiscal reforms accelerate, improving investor confidence.
• External environment stabilizes, allowing gradual rate cuts to 18% by Q3 2026.

Base scenario (50% probability)

• Inflation remains sticky around 20-25% through early 2026.
• Fiscal consolidation progresses slowly, limiting monetary easing.
• Rates remain near current levels (21-22%) until mid-2026.

Bearish scenario (20% probability)

• Inflation spikes above 30% due to external shocks or subsidy rollbacks.
• Fiscal slippage increases debt concerns.
• Central Bank hikes rates back above 25% to defend currency and curb inflation.

Policy pulse

Monetary policy will remain data-dependent, with inflation and currency stability as key triggers for any rate adjustments.

Market lens

Immediate reaction: Market participants are pricing in a cautious stance, with short-term interest rate futures reflecting limited expectations for cuts in the near term.

Egypt’s Overnight Lending Rate at 22.00% reflects a delicate balancing act between taming inflation and supporting growth. The Central Bank’s steady stance amid persistent inflation and external risks signals a cautious path forward. Fiscal discipline and external stability will be critical to enabling future monetary easing. Investors and policymakers should monitor inflation trends, fiscal developments, and geopolitical risks closely to gauge the next phase of Egypt’s monetary cycle.

Key Markets Likely to React to Overnight Lending Rate

The Overnight Lending Rate in Egypt influences a range of financial markets, from currency pairs to equities and fixed income. Key markets that historically track this indicator include the Egyptian pound exchange rates, local bond yields, and regional equity indices. Understanding these correlations helps anticipate market moves following rate announcements.

• EGPEUR: The Egyptian pound’s exchange rate against the euro is sensitive to rate changes, reflecting capital flows and inflation expectations.
• EGX30: Egypt’s benchmark stock index reacts to monetary policy shifts impacting corporate borrowing costs and investor sentiment.
• EGPUSD: The USD/EGP pair is a direct barometer of currency stability and monetary policy effectiveness.
• BTCEGP: Bitcoin priced in Egyptian pounds can reflect local currency volatility and inflation hedging demand.
• EFG: EFG Hermes, a leading financial services firm, is sensitive to interest rate changes affecting credit and investment flows.

Insight: Overnight Lending Rate vs. EGPUSD Exchange Rate Since 2020

Since 2020, the Overnight Lending Rate and the EGPUSD exchange rate have shown a strong inverse correlation. Periods of rate hikes, such as in early 2025, coincided with attempts to stabilize the EGP against the USD. Conversely, rate cuts have often preceded currency depreciation episodes. This dynamic highlights the Central Bank’s use of interest rates as a tool to manage currency volatility and inflation expectations.

FAQs

What is the Overnight Lending Rate in Egypt?

The Overnight Lending Rate is the interest rate at which banks borrow funds overnight from the Central Bank of Egypt, influencing overall monetary conditions.

How does the Overnight Lending Rate affect inflation?

Higher Overnight Lending Rates typically reduce inflation by curbing borrowing and spending, while lower rates can stimulate demand and potentially increase inflation.

Why is the Overnight Lending Rate important for investors?

It signals the Central Bank’s monetary policy stance, affecting currency stability, bond yields, and equity market performance in Egypt.

Takeaway: Egypt’s Overnight Lending Rate at 22.00% signals a cautious monetary policy stance amid persistent inflation and external risks, with future adjustments hinging on inflation trends and fiscal discipline.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Related Tradable Symbols

• EGPEUR – Egyptian pound to Euro exchange rate, sensitive to monetary policy shifts.
• EGX30 – Egypt’s main stock index, impacted by interest rate changes.
• EGPUSD – USD to Egyptian pound exchange rate, a direct currency stability indicator.
• BTCEGP – Bitcoin priced in EGP, reflecting local currency inflation hedging.
• EFG – EFG Hermes, a financial services firm sensitive to interest rate changes.