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The Central Bank of Egypt left its key policy rate unchanged at 19% on April 2, 2026, halting its monetary easing cycle amid ongoing regional conflict. The Monetary Policy Committee reiterated its commitment to anchoring inflation expectations and reestablishing a disinflationary trend.
Globally, economic growth has slowed as the intensifying conflict has heightened uncertainty and disrupted trade flows. Energy and agricultural commodity prices have surged on the back of supply disruptions, reintroducing upward pressure on inflation worldwide. These developments have materialized upside inflation risks, undermining the previously stable environment and prolonging the disinflation process.
The global outlook has been reshaped by the energy shock and a broad risk-off shift in investor sentiment, with emerging markets particularly exposed. At the domestic level, fiscal consolidation measures and exchange rate depreciation have helped absorb the energy shock, softening its impact on economic activity.
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Nevertheless, the projected inflation trajectory—and the Central Bank of Egypt’s 7% inflation target for the fourth quarter of 2026—faces pronounced upside risks. These risks could intensify if the regional conflict persists or if the pass-through from fiscal measures to prices proves stronger than currently anticipated.
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