Central Bank of Egypt Cuts Key Interest Rates by 1%

The Central Bank of Egypt cut its overnight deposit rate, overnight lending rate, and main operation rate by 1% to 21%, 22%, and 21.5%, respectively. The discount rate was also lowered to 21.5%. The decision marks the fourth interest rate cut this year, bringing total reductions in 2025 to 6.25%. The bank stated that the move reflects an updated assessment of inflation dynamics and outlook. Headline inflation decelerated to 12% in August 2025 from 13.9% in July, while core inflation eased to 10.7% from 11.6%. The easing trend was attributed to falling food prices and relative stability across non-food categories. Real gross domestic product (GDP) growth accelerated to 5% in the second quarter of 2025, up from 4.8% in the previous quarter, driven by non-petroleum manufacturing, tourism, and trade. For the 2024/2025 fiscal year, GDP growth averaged 4.4%, compared to 2.4% the prior year. The Central Bank of Egypt projects inflation to average between 12% and 13% in the third quarter of 2025, down from 15.2% in the previous quarter, with a further decline anticipated over the medium term. It forecasts headline inflation to average around 14% in 2025 before converging to its target range of 7% (±2 percentage points) in the fourth quarter of 2026 and 5% (±2 percentage points) in the fourth quarter of 2028. The committee will determine the pace and scale of further monetary easing on a meeting-by-meeting basis, guided by incoming data and risk assessments, with the objective of safeguarding price stability.