Interest Rate Cut in Egypt Expected as Investment Banks See 100 bps Reduction

Expectations are rising for an interest rate cut in Egypt at the final monetary policy meeting of 2025, as investment banks forecast a reduction of between 50 and 100 basis points, supported by easing inflation and a stronger Egyptian pound.

According to a survey conducted by Asharq among eight investment banks, most analysts anticipate a 100 basis-point cut, following the slowdown in annual urban inflation to 12.3% in November from 12.5% in October, while monthly inflation eased to 0.3%.

The outlook for an interest rate cut in Egypt is further reinforced by the recent appreciation of the pound against the US dollar, backed by strong foreign currency inflows linked to the tourism season, improving overall market sentiment.

Currently, overnight deposit and lending rates stand at 21% and 22%, after cumulative rate cuts totaling 625 basis points since the beginning of the year, marking the first easing cycle in more than four and a half years.

Analysts note that an interest rate cut in Egypt aligns with the central bank’s inflation targets of 5%–9% by the fourth quarter of 2026, especially as real interest rates remain high at around 8.5%, providing room to support economic growth while maintaining price stability.