Egypt’s central bank lowered key interest rates by 100 basis points on Thursday, bringing borrowing costs to their lowest level since July 2023 as inflation cools and the pound stabilises.
The move marked a second consecutive rate cut and was widely anticipated by analysts, most of whom had forecast a 100-basis-point reduction, while Goldman Sachs expected a deeper 150-basis-point easing. The Central Bank of Egypt’s main policy rates now stand at 29 percent for overnight deposits, 20 percent for overnight lending, and 19.5 percent for the main operation.
Policymakers are increasingly focused on reducing borrowing costs to support growth, stimulate private-sector investment, and ease pressure on households and businesses following a prolonged tightening cycle.
Africa’s second biggest economy had previously raised rates to record levels alongside a roughly 40 percent currency devaluation in early 2024 as part of efforts to secure a $57 billion global support package and resolve a foreign-exchange shortage. Authorities subsequently delivered cumulative cuts of about 725 basis points across five meetings last year.
Cooling inflation has created room for further easing. After peaking at a record 38 percent in September 2023, annual headline inflation slowed sharply through 2024 and stood at 11.9 percent in January, the lowest reading in four months. Meanwhile, the Egyptian pound strengthened to around 46.83 per dollar on Thursday, its firmest level since May 2024.
The International Monetary Fund, which backs Egypt with an expanded $8 billion programme, this week praised the country’s monetary and exchange-rate reforms, highlighting progress toward inflation targeting.
A decision on the next programme review is expected in the first quarter.
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