In a move signaling growing confidence in its economic outlook, Egypt’s central bank announced a reduction in key interest rates on Thursday, marking a strategic shift toward monetary easing as inflation slows and growth picks up momentum.
The Central Bank of Egypt (CBE) cut its overnight deposit rate by 100 basis points to 17.75%, while the lending rate was also lowered by the same margin to 18.75%. This is the second rate cut in 2025, reflecting an optimistic economic trajectory following a period of stringent fiscal reforms and monetary tightening.
“The decision aims to support the economic recovery while ensuring price stability over the medium term,” the bank said in a statement following the Monetary Policy Committee meeting.
Egypt’s annual headline inflation rate has been declining steadily in recent months, falling to 16.2% in April—its lowest level since mid-2023. Meanwhile, GDP growth for the first quarter of 2025 exceeded expectations, driven by strong performances in the tourism, energy, and Suez Canal sectors.
The International Monetary Fund (IMF) recently praised Egypt’s progress under its structural reform program, noting improvements in fiscal discipline and investor confidence. The latest rate cut is expected to stimulate private sector lending, bolster domestic consumption, and attract further investment.
Analysts suggest that the central bank’s move reflects a balancing act—stimulating growth while keeping inflation in check.
“The central bank is clearly more comfortable with the inflation trajectory and is now focusing on supporting the recovery phase,” said Mona El-Sayed, an economist at Cairo-based Nile Advisory.
The rate cut comes as Egypt continues to navigate a challenging global environment marked by fluctuating commodity prices and geopolitical uncertainty. Still, the country’s improving macroeconomic indicators suggest resilience and growing economic stability.
