Egypt Daily News – The Central Bank of Egypt (CBE) decided on Thursday, July 10, 2025, to keep its key interest rates unchanged, maintaining a cautious monetary policy stance amid signs of easing inflation and sustained economic recovery.
Following its scheduled meeting, the Monetary Policy Committee announced it would leave the overnight deposit rate at 24.00%, the overnight lending rate at 25.00%, and the main operation rate at 24.50%. The discount rate also remained unchanged at 24.50%.
The decision reflects a careful assessment of recent economic developments and future expectations, both locally and globally. On the international front, global growth projections have weakened since the start of the year due to ongoing uncertainty surrounding trade policies and the potential resurgence of geopolitical tensions.
In response, central banks in both advanced and emerging markets have adopted a more cautious approach, balancing inflation risks against fragile economic growth.
Commodity markets have also seen volatility. Oil prices have experienced sharp fluctuations driven by supply dynamics and projections of slowing global demand, while agricultural commodity prices have slightly declined, supported by favorable seasonal trends. Nevertheless, risks to inflation remain, particularly from geopolitical instability, disruptions in global trade policy, and climate-induced supply shocks.
Domestically, early indicators from the second quarter of 2025 show continued momentum in Egypt’s economic recovery. The real GDP is expected to grow at a rate close to the 4.8% recorded in the first quarter of 2025, a significant improvement from the 2.4% recorded during the same period in 2024.
The output gap is gradually narrowing, though it remains slightly negative, with expectations for full capacity utilization by the end of the fiscal year 2025/2026. As such, inflationary pressures from demand are expected to remain contained, supported by the current monetary policy stance.
Inflation data has shown encouraging signs. The annual headline inflation rate declined to 15.3% in Q2 2025 from 16.5% in Q1, continuing its downward trajectory. In June 2025, headline and core inflation dropped further to 14.9% and 11.4% respectively, largely driven by monthly deflation of 0.1% and 0.2%, mainly attributed to falling food prices and stable non-food inflation.
These favorable inflation trends have led to improved inflation expectations. The CBE anticipates that annual inflation will remain around current levels for the remainder of 2025, before gradually decreasing in 2026. This outlook depends on the evolution of non-food prices and fiscal policy measures, such as adjustments to regulated prices and their impact on domestic inflation.
Despite the positive trend, the Committee signaled a preference to hold off on initiating a monetary easing cycle, allowing more time to assess the effects of recently announced legislative changes, including amendments to the value-added tax system.
In conclusion, the Committee deemed that holding interest rates steady supports the disinflation path and allows time to further evaluate incoming data. It reaffirmed its commitment to price stability and its readiness to act using all available tools to steer inflation toward the targeted rate of 7% ±2 percentage points on average by Q4 2026.
The Committee will continue to assess its policy decisions on a meeting-by-meeting basis, carefully weighing risks and developments in the domestic and global economic landscape.
