Central Bank of Egypt Makes First Interest Rate Cut in over 4 years
The Central Bank of Egypt (CBE) made a significant monetary policy move by lowering its benchmark overnight deposit rate by 225 basis points to 25%,
Quick overview
- The Central Bank of Egypt lowered its benchmark overnight deposit rate by 225 basis points to 25%, marking the first decrease since November 2020.
- This decision reflects confidence in Egypt's economic progress, with core inflation dropping from 10% in February to 9% in March 2025.
- Headline inflation in March was 13%, significantly lower than the peak of 26% in late 2024, aided by falling food prices.
- The rate cut is expected to benefit the Egyptian capital market and industries such as finance, consumer discretionary, and construction.
The Central Bank of Egypt (CBE) made a significant monetary policy move by lowering its benchmark overnight deposit rate by 225 basis points to 25%, the first decrease since November 2020. This action highlights an important change in the state of the economy, driven by a steady drop in inflation and an improvement in macroeconomic stability
While global risks like U.S. tensions persist, the CBE’s decision reflects confidence in Egypt’s progress toward its inflation target of 7% ± 2% by Q4 2026
The rate cut was well-timed and long overdue. Core inflation, a key measure of underlying price pressures, fell from 10 percent in February to 9 percent in March 2025, indicating a stabilizing economy.
Although it was still above target, headline inflation in March, which accounts for changing food and energy prices, was 13 percent per year, far lower than the peak of 26 percent per year observed in late 2024.
Falling food prices and base effects contributed to this moderation, allowing the CBE to take action. Broader economic resilience was also reflected in this decision. While foreign reserves stabilized at $47.39 billion as of February 2025, remittances doubled year-over-year to $20 billion in the first seven months of FY 2024/2025.
The Egyptian exchange rate remained steady at about 51 Egyptian pounds (EGP) to the dollar, reducing the risk of inflation associated with imports. The rate reduction creates opportunities for the Egyptian capital market and industries like finance, consumer discretionary, and construction.
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