Egypt’s central bank on Thursday reduced its benchmark deposit rate by 100 basis points to 20 per cent, marking the fifth interest-rate cut carried out by the monetary authority this year.

The latest reduction highlights growing confidence among policymakers that inflationary pressures are easing after an extended period of tight monetary policy aimed at stabilising prices and the broader economy.

With the adjustment, Egypt’s policy rate has fallen to its lowest level since January 2024, underscoring a significant shift in the country’s monetary stance over the past year.

The move also means Africa’s second-largest economy has now lowered its key interest rate by a cumulative 725 basis points, from 27.25 percent to 20 percent, between February and December.

In a statement released after the meeting, the Central Bank of Egypt (CBE) announced that its Monetary Policy Committee also cut the lending rate to 21.00 percent and reduced the main operation rate to 20.50 percent.

The statement further noted that the discount rate was equally lowered to 20.50 percent as part of the broad adjustment to borrowing costs.

According to the central bank, “The decision reflects the committee’s assessment of recent inflation developments and updated forecasts since its previous meeting.”

Egypt has kept borrowing costs elevated for much of the past two years as authorities sought to contain inflation driven by repeated currency devaluations, supply-side disruptions, and rising fiscal pressures.

During this period, the country endured some of the highest interest rates in the region, particularly from 2022, as policymakers prioritised price stability and currency defence.

However, officials in Cairo have steadily eased monetary conditions throughout 2025, signalling a strategic shift aimed at supporting domestic investment, boosting economic activity, and easing financing conditions.

The latest rate cut follows new data indicating that annual urban inflation slowed to 12.3 percent in November, down from a three-month peak of 12.5 percent recorded in October.

The moderation in inflation was largely attributed to softer food price increases, which played a key role in easing overall consumer price pressures.

The unexpected deceleration has reduced pressure on policymakers, who had previously maintained tight monetary conditions to stabilise prices and protect the currency following last year’s inflation surge.

Thursday’s decision also signals a resumption of Egypt’s easing cycle after an earlier pause, during which authorities assessed the impact of previous rate cuts on inflation and financial stability.

Concerns about inflation had earlier constrained policymakers, compelling them to adopt a cautious stance amid currency volatility and persistent external financing pressures.

The central bank has since gradually shifted its policy position as price pressures moderate, foreign currency inflows strengthen, and financial conditions stabilise under Egypt’s ongoing reform programme supported by the International Monetary Fund.

While borrowing costs remain elevated by historical standards, the cumulative reductions implemented this year suggest increasing confidence that inflation is on a sustained downward trajectory.

This evolving outlook has created room for monetary policy to pivot gradually towards supporting economic growth without undermining price stability.