Egypt: Central Bank of Egypt decreases rates in October as expected
CBE carries on with loosening cycle: At its meeting on 2 October, the Central Bank of Egypt (CBE) decided to cut its overnight deposit, overnight lending and the main operations rates by 100 basis points to 21.00%, 22.00% and 21.50%, respectively. The reduction followed September’s 200 basis points cut, brought the cumulative cuts to 625 basis points since April and had been priced in by markets.
Reduced inflationary pressures drive cut: The CBE’s move was driven by the favorable evolution of annual and monthly headline and core inflation over the last three months. Regarding the inflation outlook, the Bank expects the downward trend in price pressures to continue in the short term.
More rate reductions on the table: The CBE did not provide explicit forward guidance on the future direction of interest rates. Our Consensus is for around 250 basis points of additional reductions in the last two meetings of 2025, scheduled for 20 November and 25 December. In 2026, our panelists expect the CBE to reduce rates further, albeit at a notably slower pace than in 2025.