CAIRO - 28 August 2025: The Monetary Policy Committee of the Central Bank of Egypt (CBE) decided in its meeting on Thursday, August 28, 2025, to cut the overnight deposit and lending rates as well as the CBE’s main operation rate by 200 basis points, bringing them to 22.00 percent, 23.00 percent, and 22.50 percent, respectively.
The committee also lowered the credit and discount rate by 200 basis points to 22.50 percent.
This decision reflects the committee’s assessment of the latest inflation developments and its outlook since the previous meeting.
Globally, recent months have shown signs of recovery in growth and stability in inflation expectations. Accordingly, central banks in both advanced and emerging economies continued to ease monetary policy, though gradually, given the prevailing uncertainties.
Commodity prices showed mixed trends, with oil experiencing slight fluctuations due to supply factors, while agricultural goods recorded divergent movements.
Nevertheless, global growth and inflation remain vulnerable to risks, particularly escalating geopolitical tensions and increased trade policy disruptions.
Domestically, preliminary estimates by the CBE indicate stronger-than-expected economic growth in the second quarter of 2025, supported by positive contributions from non-oil manufacturing and tourism.
The economy is projected to expand by 5.4 percent in Q2 2025, with real GDP growth for FY 2024/2025 averaging 4.5 percent, compared to 2.4 percent in FY 2023/2024. Inflationary pressures from demand are expected to remain contained, consistent with the current monetary stance and the projected downward path of inflation in the short term.
Meanwhile, the unemployment rate fell to 6.1 percent in Q2 2025, down from 6.3 percent in Q1 2025.
On inflation trends, annual headline inflation slowed to 13.9 percent in July 2025 from 14.9 percent in June. Core inflation remained broadly stable at 11.6 percent in July compared to 11.4 percent in June.
On a monthly basis, headline inflation recorded negative 0.5 percent and core inflation negative 0.3 percent in July.
Consecutive months of negative monthly inflation confirm the overall downward trend, supported by easing monthly pressures and the current monetary policy framework, which has improved inflation expectations.
Consistent with this moderation, annual headline inflation slowed to 15.2 percent in Q2 2025 from 16.5 percent in the previous quarter. The CBE projects inflation to continue declining, averaging between 14 and 15 percent in 2025.
These favorable developments, together with improved monthly dynamics and supportive exchange rate trends, have provided room to resume monetary easing. Inflation is expected to continue its downward trajectory throughout the forecast horizon, moving closer to the CBE’s target by Q4 2026.
Nonetheless, risks remain, particularly from administered price adjustments and potential regional geopolitical tensions.
In light of these developments, the MPC considered a 200 basis-point reduction in policy rates appropriate to reinforce inflation expectations and support the anticipated disinflationary path.
The committee emphasized that future policy decisions will be assessed on a meeting-by-meeting basis, depending on the outlook, associated risks, and incoming data.
The CBE reaffirmed its commitment to closely monitor economic and financial conditions and to employ all available tools to achieve price stability, steering inflation toward its target of 7 percent (± 2 percentage points) by Q4 2026, and 5 percent (± 2 percentage points) by Q4 2028, on average.
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