Egypt’s central bank cut its overnight interest rates by 100 basis points on Thursday, signalling cautious confidence as inflation pressures continue to ease. The monetary policy committee lowered the overnight deposit rate to 20% and the lending rate to 21%, according to a statement.
The decision followed a gradual slowdown in inflation, giving policymakers space to loosen borrowing costs after a prolonged period of monetary tightening. The central bank said real GDP growth is expected to reach about 5% in the fourth quarter of 2025, slightly below 5.3% previously.
It attributed recent economic momentum to stronger activity in non-petroleum manufacturing, trade, and the communications sector. The rate cut matched expectations from a Reuters poll, which forecast a one percentage point reduction after inflation eased in November.
Annual headline inflation is projected to average around 14% in 2025, sharply lower than the 28.3% recorded the previous year. Urban consumer inflation slowed to 12.3% in November, while core inflation rose modestly to 12.5%, reflecting lingering price pressures.
The bank reaffirmed its inflation target of 7%, plus or minus two points, by the fourth quarter of 2026. However, it warned that persistent non-food inflation and the impact of fiscal measures could cloud the path ahead.