Third Egyptian Central Bank Rate Cut Since April – Currency Thoughts
Third Egyptian Central Bank Rate Cut Since April
August 28, 2025
The Central Bank of Egypt’s new policy interest rate level will be 22.0%, still considerably north of year-on-year CPI inflation (13.9%) as of July. Along with reductions done in April and May, today’s as-expected two percentage point cut means that all but 75 basis points of a six percentage point increase in March 2024 has now been reversed. Today’s action are, according to a statement released today, intended to anchor inflation expectations, sustain the disinflationary process that has been broadening in recent months, and steer inflation to the 7% inflation target by late 2026 and 5% in the final quarter of 2028.
Officials “will re-assess the scale and pace of monetary easing on a meeting-by-meeting basis, guided by the forecast trajectory, incoming data and the prevailing balance of risks.” At peak, CPI inflation was as high as 38.0% in September 2023 just shortly before the Hamas attack on Gaza. Confidence in future disinflation is balanced by also noting that “the inflation outlook remains susceptible to domestic and global upside risks. These include the possibility of a higher-than-anticipated passthrough of administered price changes to domestic prices, as well as escalating geopolitical tensions in the region.”
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Egypt
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