The Central Bank of Egypt has now cut rates a whole 625 bps since kicking off its easing cycle in April, after its Monetary Policy Committee (MPC) decided to cut rates by a further 100 bps during its sixth meeting of the year on Thursday, the CBE said in a statement (pdf). The decision marks a continuation of the easing cycle that resumed in August after a brief pause in July.

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Where rates currently stand: The overnight deposit rate now stands at 21.00%, the overnight lending rate at 22.00%, and the main operation and disc. rates at 21.50%.

The why: The committee said its decision “reflects its updated assessment of inflation dynamics and outlook,” pointing to decelerating annual headline and core inflation. The CBE attributed the deceleration to “mild monthly dynamics … mainly driven by falling food prices and the relative stability of non-food prices.” It added that the “broad-based easing in price dynamics over the past three months suggests an improvement in inflation expectations and a gradual dissipation of the lingering impact of previous shocks.”

REMEMBER- Inflation slipped to its lowest level since March 2022 in August, coming in at 12.0%, and a number of analysts we spoke to see it staying on its downward trajectory.

The CBE now sees inflation averaging around 14% in 2025, an improvement on its commentary for the MPC’s August meeting, which put headline inflation between 14-15%. In the medium term, the bank sees inflation “moderating, albeit at a slower pace, as the disinflation path remains constrained by the downward stickiness of non-food inflation and the impact of both planned and higher-than-expected fiscal measures.” Looking further ahead, the committee still expects inflation to continue to make progress toward its 7% (± 2 percentage points) target for 4Q 2026.

As always, disinflation is not set in stone — “the inflation outlook remains susceptible to both domestic and global upside risks.” The MPC cited regional geopolitical tensions and larger than planned price hikes on certain products as the government reduces subsidies.

The move came in the middle of expectations from analysts polled by EnterpriseAM lastweek, with eight out of the 12 economists and banking experts we spoke to pencilling a rate cut between 100-200 bps, while the other four participants saw the CBE holding rates unchanged.

Analysts remain confident that this won’t be the last cut we will see this year, with the central bank still having room for at least one more 100 bps cut in 2025, Thndr Securities Brokerage’s Chief Equity Strategist Amr El Alfy told EnterpriseAM. “They will use their remaining rate cut room cautiously to balance supporting growth with maintaining price stability,” he explained. Deutsche Bank similarly forecasts a 100 bps cut in the MPC’s December meeting, but leaves the door open to further pauses if the effects of fiscal reforms “warrant an extended wait-and-see approach through December,” according to a research note from the lender seen by EnterpriseAM.

Others think the bank may make two separate 100 bps cuts before the year is out, including Capital Economics’ James Swanston, who sees the overnight deposit rate being lowered to 19.00% , according to a note.

Some corners of the int’l press also pick up the news: Bloomberg, Reuters.

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