The Central Bank of Egypt (CBE) announced a major cut to key interest rates by 2.25 percent for the first time in four years.
The overnight deposit rate, overnight lending rate, and main operation rate have each been reduced by 2.25 percentage points (225 basis points), now standing at 25 percent, 26 percent, and 25.5 percent, respectively. The discount rate has also been lowered to 25.5 percent.
This rate cut comes at a time of heightened global economic uncertainty. Factors such as ongoing supply chain disruptions and declining oil prices have sparked concerns over the sustainability of global economic growth. These external pressures have significantly influenced the Monetary Policy Committee’s (MPC) latest decision, as Egypt seeks to shield its economy from adverse global conditions.
Resilience of Egypt’s domestic economy
Despite these global challenges, Egypt’s domestic economy has shown encouraging signs of resilience. Preliminary data indicate that GDP growth surpassed 4.3 percent in the fourth quarter of 2024. This growth has been largely driven by non-petroleum manufacturing sectors, as well as trade and tourism—three key pillars that continue to bolster the nation’s economic performance.
One of the primary drivers behind the rate cut is the notable decline in inflation. Annual headline inflation fell to 13.6 percent in March 2025, a significant drop largely attributed to decreasing food prices. This easing trend has provided the CBE with the necessary room to lower interest rates without risking unchecked inflation.
Commitment to data-driven policy decisions
The MPC emphasized that the new monetary stance is designed to maintain an environment conducive to anchoring inflation expectations while supporting Egypt’s broader disinflation path. The committee reaffirmed its commitment to data-driven policy decisions, indicating that future adjustments will be evaluated on a meeting-by-meeting basis. Moving forward, the CBE is expected to closely monitor both domestic and international developments.
Economic growth projections
Earlier this week, Egypt’s Minister of International Cooperation, Rania Al Mashat, revealed that the country’s gross domestic product (GDP) at current prices is anticipated to reach EGP20.4 trillion (399.8 billion dollars) during the upcoming fiscal year. This forecast reflects the government’s efforts to stimulate economic growth amid various challenges. Al Mashat stated that real growth is expected to rise to 4.5 percent, although this projection may be subject to review if tensions escalate. The Ministry anticipates that investment and net exports will be the primary drivers of this growth, playing a crucial role in enhancing economic stability.
Ambitious investment targets set by the Ministry of Planning
The Ministry of Planning aims for a 17 percent growth in total investments in the next fiscal year, reaching EGP3.5 trillion. This ambitious target underscores the government’s commitment to attracting both domestic and foreign investments to stimulate economic activity. Private sector investments are projected to increase to 62.7 percent of total investments during the next fiscal year, amounting to EGP1.94 trillion. This marks a rise from the EGP1.6 trillion expected for the current fiscal year, which represents 61.5 percent of total investments, indicating a growing confidence in the private sector’s role in the economy. Public sector investments are set to rise to EGP1.16 trillion, compared to EGP1 trillion in the current fiscal year, reflecting the government’s strategy to bolster public spending in key areas that drive economic growth.
Read more: Egypt aims for $60 billion in foreign direct investment, $145 billion in exports
Recent inflation trends and foreign asset increases
Last week, data from Egypt’s statistics agency CAPMAS showed that the country’s annual urban consumer price inflation climbed to 13.6 percent in March, up from 12.8 percent in February. The Central Bank of Egypt (CBE) has recently disclosed a remarkable increase in net foreign assets within the Egyptian banking system, which rose by approximately $1.5 billion during February 2025. This surge brings the total to EGP515.856 billion ($10.17 billion), marking a notable increase from EGP437.261 billion ($8.7 billion) recorded in January.
Total foreign assets and EU support
According to a recent report from the CBE, the total foreign assets of the banking sector—including both the Central Bank and commercial banks—amounted to EGP3.653 trillion in February, compared to EGP3.579 trillion the previous month. During this timeframe, foreign liabilities experienced a slight decline, decreasing to EGP3.137 trillion from EGP3.142 trillion. Members of the European Parliament approved a proposal last week to provide Egypt with loans worth EUR4 billion ($4.3 billion). The EU Parliament adopted the macro-financial assistance to Egypt with 452 votes in favor, 182 against, and 40 abstentions. Additionally, the European Commission proposed support for Egypt on March 15, 2024, in the form of macro-financial assistance through loans amounting to up to EUR5 billion.
