Egypt Cuts Interest Rates For Second Time In Two Months

Cairo: Egypt's central bank on Thursday cut interest rates for the second time since April as inflationary pressures have eased in the Arab world's most populous country.

The Central Bank of Egypt (CBE) lowered interest rates by 100 basis points, its monetary policy division said in a statement, citing "a sustained recovery in economic activity" and a cooling inflation.

The cut has brought the bank's overnight deposit rate to 24 percent, its overnight lending rate to 25 percent and its rate of the main operation to 24.5 percent, the statement said.

Egypt's annual headline inflation rate stood at 13.9 percent in April, dropping sharply from its peak at 36 percent last year.

In April, the CBE slashed interest rates by 225 basis points -- its first cut since 2020 after holding or raising rates steadily in response to a prolonged economic crisis.

Egypt's economy has been under severe strain following multiple devaluations of the local currency and a steep rise in foreign debt.

The Egyptian pound has lost more than two-thirds of its value against the US dollar since early 2022.

Last month, the authorities raised fuel prices for the fourth time in a year.

The latest fuel price hike came just weeks after the International Monetary Fund (IMF) approved a $1.2 billion disbursement to Cairo, following a review of Egypt's economic reform programme.

The IMF, which expanded its support package from $3 billion to $8 billion last year, is now conducting its fifth review in which it is expected to push for more reforms.

The North African country remains burdened by soaring foreign debt, which has quadrupled since 2015, reaching $155.2 billion by September 2024.
Much of the debt is tied to large-scale infrastructure projects, including a new capital east of Cairo.

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