The Monetary Policy Committee of the Central Bank of Egypt (CBE) has opted to keep the overnight deposit and lending rates stable, maintaining them at 24 percent, 25 percent, and 24.50 percent for the central bank’s main operation. In a recent statement, the CBE clarified that the decision to uphold the credit and discount rates at 24.50 percent reflects the latest economic developments and expectations since the last meeting of the Monetary Policy Committee.
The statement highlighted preliminary indicators from the Central Bank of Egypt for the second quarter of 2025, suggesting a continued recovery in economic activity. Real GDP growth is anticipated to approach the annual rate recorded in the first quarter of 2025, reaching 4.8 percent, compared to 2.4 percent in the second quarter of 2024.
Inflation rate decline
Additionally, the statement revealed that the annual headline inflation rate decreased during the second quarter of 2025 to 15.3 percent, down from 16.5 percent in the first quarter of 2025, continuing its downward trajectory. This decline is attributed to relatively stable monthly inflation trends, appropriate monetary tightening, and the diminishing effects of previous shocks.
Both the annual headline and core inflation rates fell in June 2025 to 14.9 percent and 11.4 percent, respectively. This is primarily due to monthly inflation developments, with headline and core inflation recording -0.1 percent and -0.2 percent, respectively. Such trends can largely be explained by lower food prices and stable non-food inflation.
In May 2025, Egypt’s central bank reduced its overnight interest rates by a less-than-anticipated 100 basis points, citing an acceleration in economic growth during the first quarter alongside a deceleration in inflation. The Monetary Policy Committee (MPC) adjusted the overnight deposit rate to 24 percent and the lending rate to 25 percent, marking its second reduction this year after maintaining steady rates for a full year.
Annual headline inflation nearly halved in February, dropping to 12.8 percent, largely due to a base effect following Egypt’s receipt of a $24 billion real estate investment from the United Arab Emirates and the signing of an $8 billion financial support program with the International Monetary Fund. Since that time, inflation has steadily risen, reaching 13.9 percent in April. “Inflation is expected to continue declining throughout the remainder of 2025 and 2026, albeit at a constrained pace given the expected drag from implemented and planned fiscal consolidation measures in 2025, in addition to the relative persistence of non-food inflation,” the statement noted.
Economic development plan
Egypt’s annual urban consumer price inflation surged to 16.8 percent in May, up from 13.9 percent in April, according to recent data released by the statistics agency CAPMAS. This increase in headline inflation exceeded Reuters’ median forecast, which anticipated a rise to 14.9 percent based on the analysis of 12 experts, primarily driven by an adverse base effect. Annual inflation has significantly decreased from a record high of 38 percent in September 2023, aided by an $8 billion financial support package signed with the IMF in March 2024. The decline in inflation prompted the Central Bank of Egypt to lower its overnight lending rate by 225 basis points to 26.0 percent during its meeting on April 17, followed by another reduction of 100 basis points on May 22.
Increased public investments for FY 2025/26
In June 2025, Egypt’s parliament ratified the government’s economic and social development plan for fiscal year (FY) 2025/26, which aims to achieve a 4.5 percent economic growth rate despite the challenges posed by ongoing regional instability. The plan, presented by Planning Minister Rania Al-Mashat to the House of Representatives, signifies a notable recovery from the 2.4 percent growth recorded in FY 2023/24.
Preliminary indicators for the first nine months of the current fiscal year (2024/25) suggest an improving growth trajectory, according to government assessments. The new plan sets total public investments at EGP 1.16 trillion ($22.89 billion), up from an expected EGP 1 trillion in the current fiscal year. This increase reflects the government’s strategy to rationalize public spending, reduce public debt, and create more opportunities for private sector participation in national development.
Private sector investment is projected to rise to approximately EGP 1.94 trillion, accounting for 63 percent of total investments, as opposed to 37 percent from the public sector. The plan focuses on allocating public funds to projects with high completion rates to maximize impact.
