Egypt’s central bank lowers interest rates by 100 basis points

Egypt’s central bank lowered overnight interest rates by 100 basis points on Thursday, its fourth cut of the year, stating that despite economic growth accelerating to 5% in the second quarter, inflationary pressures are still low.

In a statement, the central bank’s monetary policy committee reduced the loan rate from 23% to 22% and the deposit rate from 22% to 21%.

The central bank has flexibility to ease because inflation was dropping, according to the median of 16 economists surveyed, who had predicted a 100 basis point cut.

“Despite the acceleration in growth, output remains marginally below potential, suggesting that its current trajectory will continue to support the forecasted disinflation path over the short term,” the committee stated in its press release.

According to the report, Egypt’s GDP grew by 5.0% in the second quarter of 2025 compared to the same period last year, which was faster than the 4.8% growth in the first quarter. Growth in fiscal 2024/25, which ended in June, increased from 2.4% to 4.4% due to trade, tourism, and non-oil manufacturing.

“Demand-side inflationary pressures are expected to remain limited given the prevailing monetary stance,” stated the statement.

According to the state statistics agency CAPMAS, headline inflation continued its decline from a peak of 38.0% in September 2023, dropping to 12.0% in August from 13.9% in July.

The statement said a broad-based reduction in prices over the past three months demonstrated that inflation expectations were improving and the impact of prior shocks was gradually dissipating.