The Central Bank of Egypt signaled on Thursday that it has fully pivoted to growth stimulation, closing out 2025 with a 100 bps interest rate cut at its final Monetary Policy Committee meeting of the year. The move brings total easing for 2025 to 725 bps, further ending the ultra-restrictive cycle that defined the Egyptian economy since the March 2024 currency float before rate easing began.

By the numbers: The committee set the overnight deposit rate at 20.00%, the overnight lending rate at 21.0%, and the main operation and disc. rates at 20.50%, according to a statement. Interest rates now stand at their lowest level since January 2024.

Why this matters

It’s another all-clear signal for the business community. Corporate borrowing for any purpose other than short-term opex spending has been effectively frozen for nearly two years with interest rates hovering near 30%. The central bank made clear it is pushing ahead with a careful easing cycle — giving most of us hope that interest rates could hit a level by late next year that spurs companies to once again start borrowing to fund capital expenditures.

The easing cycle is just getting underway

725 bps sounds like a lot, but we’re just at the “beginning or middle” of a longer journey, Al Ahly Pharos’ Hany Genana tells EnterpriseAM. Despite successive cuts, rates remain 1.25% above their pre-EGP float level in March of last year. “What was done in a single day in 2024 took an entire year to unwind,” Genena said.

Even after this cut, real interest rates in Egypt are still among the highest in the world, Genena said. Current real interest rates are between 8-9%, which is historically high for Egypt and “not the norm globally or in stable economies,” he added.

The year ahead should see the central bank putting its rate-cutting cycle up a gear, with Genena forecasting another 800 bps worth of cuts in 2026. This would bring real interest rates to 1-2%, “balancing growth and price stability,” Genena said.

Eating away at rates will also eat away at the country’s debt servicing burden

The move is a significant W for the Finance Ministry. The cut is a “gift” to the treasury, with interest payments recently consuming over 100% of total government revenues in the first four months of the fiscal year, EG Bank Board Member Mohamed Abdel Aal tells us. Every 100 bps drop in rates saves the Finance Ministry some EGP 70-80 mn in annual debt-servicing costs, which can then be shifted toward social spending or other priorities.

Looking ahead

The question for 2026 is no longer if the CBE will cut, but how fast. If the central bank is to hit its ambitious inflation target of 7% (±2%) by 4Q 2026, it will have to strike a delicate balance between tackling inflation and bringing rates down. The central bank has yet to release its MPC meeting calendar for 2026. Its first meeting of the year has happened in February in each of the past five years, although it historically also held meetings in the second half of January.

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