The overnight deposit rate now stands at 22.00 percent, while the overnight lending rate and the rate of the main operation have been cut to 23.00 percent and 22.50 percent, respectively. The discount rate was also reduced to 22.50 percent.
In a statement, the CBE said the decision reflects the Committee’s updated assessment of inflation trends and its outlook, following recent data showing a deceleration in headline inflation and a recovery in domestic growth.
Global backdrop supports gradual easing
Globally, economic activity has shown signs of recovery while inflation expectations have remained broadly stable. Central banks in both advanced and emerging markets have continued to ease monetary policies, albeit cautiously, amid lingering uncertainties.
Oil prices remained volatile due to supply-side factors, while agricultural commodities exhibited mixed trends. The global outlook, however, remains exposed to risks, particularly the escalation of geopolitical tensions and trade disruptions.
Domestic activity beats expectations
On the domestic front, the CBE’s nowcast for the second quarter of 2025 indicates stronger growth than previously anticipated, supported primarily by robust performance in non-petroleum manufacturing and tourism.
Egypt’s real GDP grew by 5.4 percent in Q2 2025, bringing the average growth rate for fiscal year (FY) 2024/2025 to 4.5 percent, up from 2.4 percent in FY 2023/2024. The unemployment rate fell to 6.1 percent in 3Q 2025, down from 6.3 percent in the previous quarter.
Despite the pick-up in growth, the CBE noted that demand-side inflationary pressures remain contained, aided by its tight monetary stance and improved macroeconomic fundamentals.
Inflation eases, deflation recorded in July
Annual headline inflation dropped to 13.9 percent in July 2025, compared to 14.9 percent in June. Core inflation was relatively stable, recording 11.6 percent in July versus 11.4 percent in the prior month.
On a monthly basis, both headline and core inflation registered deflation in July, with rates of -0.5 percent and -0.3 percent, respectively. The CBE attributed this to broad-based easing in price pressures and an improving inflation outlook.
With inflation falling to 15.2 percent in 2Q 2025 from 16.5 percent in 1Q, the CBE projects the rate to continue easing, averaging between 14 and 15 percent over the remainder of the year. The central bank expects inflation to converge towards its seven percent (±2 percent) target by 4Q 2026.
Nonetheless, risks remain. These include potential upward pressure from administered price adjustments and regional geopolitical instability, the CBE warned.
Policy outlook remains data-dependent
In light of these developments, the MPC stated that the two percent (200 bps) rate cut is consistent with maintaining a restrictive policy stance that anchors inflation expectations while supporting economic recovery.
Looking ahead, the Committee reiterated that it will continue to assess the appropriate pace and magnitude of monetary easing on a meeting-by-meeting basis, based on incoming data and the balance of risks.
The CBE reaffirmed its commitment to its price stability mandate, aiming to steer inflation toward its medium-term targets of 7 percent (±2 percent) by 4Q2026 and 5 percent (±2 p.p.) by Q4 2028.
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