Egypt Delivers Another 100 Bps Rate Cut as Forecast

The Central Bank of Egypt slashed key interest rates by another 100 bps to 19% on February 12, 2026, bringing borrowing costs to the lowest level since July 2023, amid slowing inflation and a strengthening currency. The second consecutive rate cut was widely expected, with most analysts anticipating a 100-basis-point reduction. The latest data showed annual urban inflation eased to a four-month low of 11.9% in January 2026 from 12.3% in the month earlier; while core inflation decelerated for the second month to a five-month low of 11.2%. Egypt’s pound has appreciated around 2% so far this year and is currently trading at 46.8 per US dollar, its highest level since May 2024. The discount rate was also cut to 19.5%. In addition, the CBE Board of Directors reduced the required reserve ratio (RRR) for commercial banks from 18% to 16%.

The Central Bank of Egypt lowered key interest rates by 100 bps on Thursday, 25 December 2025, signaling growing confidence that inflationary pressures are easing after a prolonged period of tight monetary policy, bringing rates to their lowest level since January 2024. The latest data showed annual urban inflation eased to 12.3% in November, down from October’s three-month high of 12.5%, mainly driven by softer increases in food prices (0.7% vs 1.5% in October), the lowest since April 2021. The central bank targets inflation of around 5–9% in Q4 2026, while expecting real GDP growth to reach around 5%. The Monetary Policy Committee also slashed the overnight deposit rate to 20.0%, the overnight lending rate to 21.0%, and the main operation rate to 20.50%, while the discount rate was reduced to 20.50%. Egypt has maintained elevated borrowing costs for much of the past two years as it sought to rein in inflation driven by currency devaluations, supply shocks, and fiscal pressures.

The Central Bank of Egypt kept its overnight deposit rate steady at 21% at its November 2025 meeting, pausing after four consecutive cuts to curb inflationary pressures, anchor expectations, and restore the disinflation path. Analysts had anticipated a 50 bps rate cut to 20.5%. Policymakers noted that annual headline inflation accelerated to 12.5% in October 2025 from 11.7% in September, and that core inflation rose to 12.1% from 11.3% in the previous month. Inflation is projected to inch up as the impact of energy price increases takes hold toward the end of Q4 2025, before gradually declining in H2 2026 toward the CBE target. The Committee also decided to keep the overnight lending rate at 22% and the discount rate unchanged at 21.5%.