Introduction to Egypt’s Monetary Policy
The Monetary Policy Committee of the Central Bank of Egypt (CBE) has decided to maintain the overnight deposit and lending rates at 24 percent and 25 percent, respectively. This decision reflects the latest economic developments and expectations since the last meeting of the Monetary Policy Committee. The CBE’s main operation rate has also been kept stable at 24.50 percent.
Economic Recovery
Preliminary indicators from the Central Bank of Egypt suggest a continued recovery in economic activity during the second quarter of 2025. Real GDP growth is expected to reach 4.8 percent, compared to 2.4 percent in the second quarter of 2024. This growth is a positive sign for the Egyptian economy, indicating a strong rebound from previous years.
Inflation Rate Decline
The annual headline inflation rate has decreased to 15.3 percent in the second quarter of 2025, down from 16.5 percent in the first quarter. This decline is attributed to relatively stable monthly inflation trends, appropriate monetary tightening, and the diminishing effects of previous shocks. Both the annual headline and core inflation rates have fallen, with the headline inflation rate reaching 14.9 percent and the core inflation rate reaching 11.4 percent in June 2025.
Interest Rate Adjustments
In May 2025, the Central Bank of Egypt reduced its overnight interest rates by 100 basis points, citing an acceleration in economic growth and a deceleration in inflation. This was the second reduction in interest rates this year, following a year of steady rates. The reduction in interest rates is expected to stimulate economic growth and reduce inflation.
Economic Development Plan
Egypt’s parliament has ratified the government’s economic and social development plan for fiscal year 2025/26, aiming to achieve a 4.5 percent economic growth rate. The plan sets total public investments at EGP 1.16 trillion, up from an expected EGP 1 trillion in the current fiscal year. Private sector investment is projected to rise to approximately EGP 1.94 trillion, accounting for 63 percent of total investments.
Increased Public Investments
The government’s economic development plan focuses on allocating public funds to projects with high completion rates to maximize impact. The plan aims to create more opportunities for private sector participation in national development and reduce public debt. Increased public investments are expected to stimulate economic growth and improve living standards in Egypt.
Conclusion
In conclusion, the Central Bank of Egypt’s decision to maintain interest rates is a positive sign for the Egyptian economy. The decline in inflation rates and the growth in economic activity are indications of a strong rebound from previous years. The government’s economic development plan and increased public investments are expected to stimulate economic growth and improve living standards in Egypt. Overall, the Egyptian economy is showing signs of recovery, and the government’s policies are expected to support this growth in the coming years.
