Egypt's central bank cuts key interest rates by 1% as inflation eases to 12%

CAIRO - 2 October 2025: The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) cut its key policy rates by 100 basis points in its latest meeting, citing improved inflation dynamics and a stronger growth outlook.

The CBE lowered the overnight deposit rate to 21.00 percent, the overnight lending rate to 22.00 percent, and the rate of the main operation to 21.50 percent. The discount rate was also reduced to 21.50 percent.

It attributed the decision to domestic and global factors saying that domestically, real GDP growth accelerated to 5.0 percent in the second quarter of 2025, up from 4.8 percent in the previous quarter. For FY 2024/25, growth averaged 4.4 percent, nearly doubling the 2.4 percent recorded in FY 2023/24, driven by strong performance in non-petroleum manufacturing, tourism, and trade.

Inflation data supported the move, with annual headline inflation slowing to 12.0 percent in August 2025 from 13.9 percent in July. Core inflation also eased to 10.7 percent from 11.6 percent. On a monthly basis, headline and core inflation rose by only 0.4 percent and 0.1 percent, respectively, reflecting declining food prices and stable non-food categories.

CBE projections show inflation averaging between 12 and 13 percent in the third quarter of 2025, compared to 15.2 percent in the previous quarter. For the full year, headline inflation is forecast at around 14 percent, before gradually converging towards the CBE’s target of 7 percent (± 2 percentage points) by the fourth quarter of 2026 and 5 percent (± 2 percentage points) by the fourth quarter of 2028.

Globally, growth is showing signs of recovery while inflation expectations remain stable. Central banks in both advanced and emerging markets continue to cautiously ease policy, with oil prices largely stable and agricultural prices contained despite divergent movements, it noted.

The MPC said it will maintain a data-driven approach in upcoming meetings, carefully assessing risks including potential fiscal adjustments and heightened geopolitical tensions.