…marks fifth interest-rate cut in 2025
Egypt’s central bank on Thursday cut its benchmark deposit rate by 100 basis points to 20 percent, marking its fifth interest-rate reduction this year. This underscores policymakers’ growing confidence that inflationary pressures are easing after a prolonged period of tight monetary policy.
The move takes the policy rate to its lowest level since January 2024. It also means Africa’s second biggest economy has now lowered its key interest rate by a cumulative 725 basis points—from 27.25 percent to 20 percent—between February and December.
In a statement, the Central Bank of Egypt (CBE) said its Monetary Policy Committee also reduced the lending rate to 21.00 percent and the main operation rate to 20.50 percent, while the discount rate was cut to 20.50 percent.
The decision, the bank said, reflects the committee’s assessment of recent inflation developments and updated forecasts since its previous meeting.
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Egypt has maintained elevated borrowing costs for much of the past two years as it sought to rein in inflation fuelled by currency devaluations, supply-side shocks, and mounting fiscal pressures.
However, after enduring some of the highest interest rates in the region since 2022, policymakers in Cairo have progressively eased monetary conditions throughout 2025 in a bid to support domestic investment and economic activity.
The latest easing follows fresh data showing annual urban inflation slowed to 12.3 percent in November, down from a three-month high of 12.5 percent in October, largely due to softer food price increases. The surprise deceleration has eased pressure on policymakers, who had kept monetary conditions tight to stabilise prices and the currency after last year’s inflation surge.
Thursday’s decision signals a resumption of Egypt’s easing cycle after an earlier pause to assess the impact of previous cuts. Inflation concerns had previously constrained policymakers, forcing a cautious approach amid currency volatility and external financing pressures.
The central bank has gradually shifted its stance as price pressures moderate, foreign currency inflows improve, and financial conditions stabilise under Egypt’s ongoing reform programme backed by the International Monetary Fund.
While borrowing costs remain high by historical standards, the cumulative reductions this year point to growing confidence that inflation is on a sustained downward path, creating room for monetary policy to pivot toward supporting growth.
