Central Bank of Egypt Lowers Interest Rate for 1st Time since 2020

Egypt’s central bank announced that it was lowering interest rates for the first time since 2020, days after the government announced a reduction in fuel subsidies. The Central Bank of Egypt cut interest rates by 225 basis points, its monetary policy division said in a statement.

Its overnight deposit rate, overnight lending rate, and the rate of the main operation now stood at 25 per cent, 26 per cent and 25.5 per cent.

The bank cited “recovery in economic activity for the fourth consecutive quarter” and a decline in inflation to its lowest rate in three years.

The central bank has raised or held interest rates since 2020, during an economic crisis that saw the local currency devalued several times against the dollar. The Egyptian authorities last week raised fuel prices for the fourth time in a year.

The latest move comes weeks after the International Monetary Fund approved a US$1.2 billion payout to Cairo following its fourth review of the country’s economic reform programme.

Authorities have issued a number of tough reforms to comply with an International Monetary Fund deal that was expanded from US$3 billion to US$8 billion last year.

Egypt remains burdened by soaring foreign debt, which has quadrupled since 2015, reaching US$155.2 billion by September 2024. Much of the debt is tied to large-scale infrastructure projects, including a new capital east of Cairo.