URGENT: Egypt’s central bank cuts interest rates by 100bps as inflation outlook improves

Egypt’s central bank cut key interest rates by 100 basis points on Thursday, signalling growing confidence that inflationary pressures are easing after a prolonged period of tight monetary policy.

The Monetary Policy Committee (MPC) lowered the overnight deposit rate to 20.0 per cent, the overnight lending rate to 21.0 per cent, and the main operation rate to 20.50 per cent, according to a statement from the Central Bank of Egypt (CBE). The discount rate was also cut to 20.50 per cent.

The decision reflects the committee’s updated assessment of inflation dynamics and the evolving economic outlook since its previous meeting. Egypt has maintained elevated borrowing costs for much of the past two years as it sought to rein in inflation driven by currency devaluations, supply shocks, and fiscal pressures.

The rate cut marks a shift towards policy easing as price growth shows signs of moderation, offering potential relief to businesses and households facing high financing costs.

“MPC has judged that a 100-basis-point reduction in policy rates is consistent with maintaining a monetary stance that anchors inflation expectations and sustains the disinflation path.” the CBE said in its monetary policy note. The” Committee will determine the magnitude and pace of monetary easing based on evolving economic conditions, with policy decisions contingent on the forecast trajectory, incoming data, and the balance of risks. The Committee stands ready to adjust its policy instruments as needed to fulfil its price-stability mandate, guiding inflation toward the CBE target of 7 percent (± 2 p.p.) in Q4 2026, on average.”

Attribution: Amwal Al Ghad English