Egypt cuts bank rates by 100 basis points as inflation cools further

The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) cut the overnight deposit rate from 21 per cent to 20 per cent and the lending rate from 22 per cent to 21 per cent.

The MPC said the cut was made because of easing inflationary pressures and an improved outlook.

The rate of the main operation was cut to 20.5 per cent. The discount rate was also cut by one per cent (or 100 basis points) to 20.50 per cent, the CBE said in a statement following the meeting.

Monetary policy shift reflects stable inflation

In its statement, the CBE said “economic growth has remained relatively resilient at the global level, though the outlook continues to be clouded by trade uncertainty, persistent geopolitical tensions, and slowing demand. Inflation trends have been broadly stable, with central banks in advanced and emerging markets alike adopting a cautious approach to gradual monetary easing”.

Domestically, the CBE fourth quarter of 2025 forecast points to a slight moderation in economic growth, with real GDP growth expected to hover around 5.0 per cent, compared to 5.3 per cent in the previous quarter (driven primarily by non-petroleum manufacturing, trade, and communications).

On inflation, the CBE said: “Annual headline inflation resumed its downward trend in November 2025, falling to 12.3 per cent despite recent fuel price adjustments. The decline was largely driven by a sharp drop in food inflation, which fell to 0.7 per cent — its lowest level in more than four years.

“Annual core inflation stood at 12.5 percent in November, driven mainly by non-food items, particularly services. Both headline and core inflation are below their historical seasonal averages, pointing to improving inflation expectations and a gradual fading of the impact of earlier shocks.

“Against this backdrop, the CBE expects headline inflation to stabilise near current levels in the fourth quarter of 2025, with the annual average projected at around 14.0 per cent for 2025, down from 28.3 per cent in 2024. Inflation is forecast to decline further in 2026.”

The central bank targets inflation of around 7 per cent +/- 2 percentage points in the fourth quarter of 2026.