Egypt Central Bank Cuts Rates By 100 Basis Points As Inflation Eases

AFRICAN BUSINESS AND ECONOMYJanuary 8, 2026 at 9:40 PM UTC

TLDR

Egypt's Central Bank cuts key interest rates by 100 basis points at its final 2025 meeting, signaling easing inflation and economic stability.
Global and domestic economic growth remains steady, with headline inflation projected to decrease to around 14% in 2025.
The rate cut indicates a shift towards growth support while managing inflation risks, hinting at potential future rate cuts in 2026.

The Monetary Policy Committee of the Central Bank of Egypt cut key interest rates by 100 basis points at its final meeting of 2025, signaling growing confidence that inflation is easing and conditions allow for a cautious shift toward monetary accommodation.

The committee reduced the overnight deposit rate to 20% and the lending rate to 21%. The main operation and discount rates were set at 20.50%.

The decision comes as global growth remains broadly stable, though risks persist from geopolitical tensions, trade uncertainty, and weaker external demand. International inflation trends have steadied, prompting many central banks to move toward gradual, data-driven easing cycles.

Domestically, economic growth has shown slight moderation. Egypt’s GDP is expected to grow by about 5% in the fourth quarter of 2025, down from 5.3% in the third quarter. Growth continues to be supported by non-oil manufacturing, trade, and communications. Demand-side inflation pressures remain contained, supporting the disinflation trend.

Headline inflation is projected to average around 14% in 2025, down from 28.3% in 2024. The central bank expects inflation to continue declining in 2026, moving toward its 7% ±2% target by the end of the year.

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Key Takeaways

The rate cut marks a shift in Egypt’s monetary stance after an extended period of tight policy aimed at stabilizing prices and restoring confidence. With inflation falling sharply from last year’s peak, policymakers now see room to support growth without reigniting price pressures. Still, risks remain. Non-food inflation has proven sticky, and upcoming fiscal measures could affect the pace of disinflation. External factors, including global commodity prices and financial market conditions, also pose potential challenges. By emphasizing data dependence, the Monetary Policy Committee is signaling that easing will be gradual rather than aggressive. This approach aims to balance growth support with the need to anchor inflation expectations and maintain currency stability. If inflation continues to fall as projected, further rate cuts are likely in 2026, though the pace will depend on domestic price dynamics and global developments. For investors and businesses, the move provides early confirmation that Egypt is transitioning from stabilization toward a more growth-supportive policy phase, while remaining cautious about lingering inflation risks.

Egypt