MENA Newswire, CAIRO, December 27, 2025: The Central Bank of Egypt (CBE) has cut its key interest rates by 100 basis points, marking a continuation of its monetary easing cycle amid signs of easing inflationary pressures. The decision, announced following the Monetary Policy Committee’s (MPC) meeting on Thursday, lowers the overnight deposit rate to 20.00 percent, the overnight lending rate to 21.00 percent, the main operation rate to 20.50 percent, and the discount rate to 20.50 percent. The move follows a series of rate reductions throughout 2025 as the central bank sought to support domestic economic conditions while maintaining stability in the financial system. Since the beginning of the year, the CBE has reduced interest rates cumulatively by 725 basis points across several meetings.
The December decision aligns with this broader policy trajectory, reflecting the bank’s assessment of improved inflation dynamics and macroeconomic performance. Recent economic data from Egypt indicate that inflationary pressures have moderated compared to earlier in the year. Annual urban consumer inflation slowed in recent months, largely due to easing food and commodity prices and the stabilization of the Egyptian pound. The improved supply situation and reduced import bottlenecks have contributed to this trend, providing the central bank with room to adjust borrowing costs downward. The rate adjustment is part of Egypt’s broader effort to reinforce monetary stability after a period of sharp inflation that peaked in 2023 and early 2024. During that period, global commodity shocks, currency depreciation, and supply chain constraints contributed to price surges that prompted the CBE to raise policy rates aggressively.
The recent moderation in inflation and improved balance in the foreign exchange market have since enabled the monetary authority to ease its stance to support sustainable economic activity. The latest decision maintains the central bank’s focus on achieving its targeted inflation range, which aims to ensure price stability while encouraging investment and domestic production. By reducing policy rates, the CBE is enabling more favorable financing conditions for businesses and households, which could gradually lower the cost of credit in the banking system. While lending and deposit rates across commercial banks typically adjust in response to the CBE’s decisions, the overall impact on liquidity and consumption will depend on prevailing demand conditions and the pace of private sector response.
Annual inflation decline creates room for monetary policy shift
Egypt’s economic indicators have shown gradual improvement through 2025, supported by stable remittance inflows, steady tourism revenues, and resilient performance in sectors such as construction, energy, and logistics. Foreign exchange reserves have remained at comfortable levels, while the Egyptian pound has shown relative stability against major currencies in recent months. The central bank’s efforts to manage liquidity and enhance transparency in monetary operations have contributed to reinforcing market confidence and exchange rate stability. The policy rate cut also comes as Egypt continues implementing structural reforms in coordination with international financial institutions. These reforms aim to strengthen fiscal discipline, enhance the investment climate, and expand industrial and export capacity. Although monetary policy decisions are taken independently, they complement broader government efforts to sustain growth and restore macroeconomic balance following global and regional economic challenges.
Economic indicators point to gradual recovery and balance
In the statement accompanying the rate decision, the Central Bank of Egypt reaffirmed its commitment to closely monitoring inflation trends and maintaining sound monetary conditions consistent with its price stability mandate. The MPC emphasized that it will continue to base its decisions on available data and economic developments to ensure consistency with the central bank’s objectives. The December 2025 rate cut positions Egypt among several emerging market economies that have begun to ease monetary policy after prolonged periods of tightening. As inflationary risks recede and global commodity markets stabilize, policymakers in these economies are increasingly shifting focus toward supporting growth momentum and encouraging investment recovery. The next meeting of the Central Bank of Egypt’s Monetary Policy Committee is scheduled for early 2026. Until then, the CBE is expected to maintain its data-driven approach in evaluating economic conditions and ensuring that monetary policy remains aligned with domestic and global financial stability.
The 100-basis-point reduction marks the latest step in Egypt’s monetary normalization process, highlighting an improved inflation outlook and a more stable financial environment. By recalibrating its policy tools, the Central Bank of Egypt continues to play a pivotal role in steering the country’s economy toward greater balance and sustainable growth. The decision underscores the ongoing recovery in domestic demand, a steady improvement in fiscal indicators, and stronger investor confidence in Egypt’s macroeconomic framework. It also reflects the effectiveness of recent structural and monetary reforms designed to strengthen liquidity, enhance financial inclusion, and maintain currency stability, positioning Egypt for continued resilience amid global economic adjustments.