Egypt’s central bank has reduced its overnight interest rates by a less-than-anticipated 100 basis points, citing an acceleration in economic growth during the first quarter and a deceleration in inflation. The Monetary Policy Committee (MPC) has adjusted the overnight deposit rate to 24 percent and the lending rate to 25 percent, marking its second reduction this year after maintaining rates steady for a full year.
The median forecast from 16 analysts surveyed by Reuters indicated that the central bank would lower rates by 175 basis points. According to the MPC’s statement, growth is expected to have increased to 5.0 percent in the first quarter, up from 4.3 percent in the last quarter of 2024, and is projected to continue its upward trajectory in the financial year commencing in July.
Read more: Egypt’s economy to grow between 3.5 percent and 4.5 percent in 2025: Report
Annual headline inflation nearly halved in February to 12.8 percent, primarily 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 gradually 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.
“The MPC judges that cutting policy rates by 100 basis points strikes a balance between vigilance against prevailing risks and the ample room available to advance the monetary easing cycle, whilst supporting the projected disinflation path over the forecast horizon,” it added.
