(Reuters) -Egypt’s central bank cut its overnight interest rates by 100 basis points on Thursday, its fourth reduction this year, saying inflationary pressures remain limited even after economic growth accelerated to 5% in the second quarter.
The central bank’s monetary policy committee lowered the deposit rate to 21% from 22% and the lending rate to 22% from 23%, it said in a statement.
The median of 16 analysts polled had expected a 100-basis-point reduction, arguing that slowing inflation gave the central bank room to ease.
“Despite the acceleration in growth, output remains marginally below potential, suggesting that its current trajectory will continue to support the forecasted disinflation path over the short term,” the committee said in its statement.
Egypt’s economy expanded by 5.0% in the second quarter of 2025 from a year earlier, accelerating from 4.8% growth in the first quarter, it added. Tourism, non-oil manufacturing and trade caused growth to jump to 4.4% in fiscal 2024/25, which ended in June, from 2.4% the previous year.
“Demand-side inflationary pressures are expected to remain limited given the prevailing monetary stance,” the statement said.
Headline inflation fell to 12.0% in August from 13.9% in July, continuing a slide from a peak of 38.0% in September 2023, according to the state statistics agency CAPMAS.
The statement said a broad-based easing in prices over the past three months suggested that inflation expectations were improving and the impact of previous shocks was gradually dissipating.
(Reporting by Enas Alashray, Ahmed Tolba and Patrick Werr; Addition reporting by Tala Ramadan; Editing by Timothy Heritage, Kevin Liffey and Susan Fenton)
