The Central Bank of Egypt decided to reduce interest rates on deposits and lending by 1% on Thursday, during the sixth Monetary Policy Committee meeting of 2025, bringing the rates to 21.00% for deposits and 22.00% for lending. It also cut the credit and discount rate by 100 basis points to 21.50%.

Previous meetings saw interest rates cut three times by a total of 5.25%, with rates held steady in the February and July meetings.

This decision coincides with a decline in the core inflation rate—as calculated by the central bank—to 10.7% in August 2025 compared to 11.6% in July 2025, and a decrease in the overall urban inflation rate year-on-year to 12% in August 2025 from 13.9% in July 2025.

In its Monetary Policy report released in early August, the central bank revised its inflation forecasts for the upcoming period. Earlier projections expected inflation to fall to around 14-15%, but the current reading suggests inflation rates will stabilize at current levels during the second half of the year, with an annual average between 15% and 16%.

Regarding 2026 forecasts, the central bank expects inflation to gradually decline to an average between 11% and 12%, reaching the targeted level of 7% ± 2% by the end of the fourth quarter of the same year.

In March 2024, the central bank allowed the market to determine the Egyptian pound exchange rate, supported by an $8 billion financing package from the International Monetary Fund, and at that time raised interest rates to tighten monetary policy and curb the expected inflation rise over nearly a year.