Egyptian Banks Weigh Interest Rate Cuts following Central Bank’s 200-Point Reduction

Several major Egyptian banks are reviewing their deposit and lending rates after the Central Bank of Egypt (CBE) announced a sharp 200 basis point cut in key interest rates, signaling the start of a new monetary easing cycle.

Mohamed El-Etreby, Chairman of the National Bank of Egypt (NBE), confirmed that the bank’s Assets and Liabilities Committee (ALCO) will convene on Sunday to discuss adjustments to savings instruments and deposit products in light of the CBE’s decision. Similarly, Banque Misr said its own committee will meet to consider revising yields on certificates and other offerings.

The CBE’s Monetary Policy Committee (MPC) on Thursday lowered the overnight deposit rate to 22%, the overnight lending rate to 23%, and the main operation rate to 22.5%, while cutting the discount rate by 200 basis points to 22.5%.

In its statement, the MPC said the decision reflected an updated assessment of inflationary pressures, which have shown signs of easing. Egypt’s annual headline inflation dropped to 13.9% in July 2025, down from 14.9% in June, while core inflation stood at 11.6%. On a monthly basis, headline inflation recorded -0.5% in July, marking the second consecutive month of negative inflation.

The bank noted that these disinflationary trends were supported by easing supply-side shocks, stable exchange rate movements, and the impact of previous monetary policies. It forecast inflation to average 14–15% in 2025, converging toward the central bank’s official target of 7% ±2 percentage points by Q4 2026, and 5% ±2 percentage points by Q4 2028.

Beyond inflation, the CBE pointed to an improved economic outlook. Preliminary data suggest GDP growth of 5.4% in Q2 2025, driven by non-oil manufacturing and tourism, with full-year growth for FY2024/25 expected to average 4.5%, up from 2.4% in FY2023/24.

Labor market conditions also improved, with unemployment falling to 6.1% in Q2 2025, compared to 6.3% in the previous quarter.

Despite the positive trends, the CBE cautioned that inflation expectations remain vulnerable to risks, including the impact of price-administered goods, potential global supply shocks, and heightened geopolitical tensions in the region.

The MPC emphasized that future monetary policy decisions would continue to be data-driven, evaluated on a meeting-by-meeting basis. It reaffirmed its readiness to use all available tools to ensure price stability and guide inflation toward its targets.