Bloomberg <\/p>\n
(Bloomberg) — Egypt\u2019s central bank made its fifth interest-rate cut of the year, after a surprise slowdown in inflation gave authorities scope to resume an easing cycle.<\/p>\n
The regulator reduced its benchmark deposit rate by 100 basis points to 20% and the lending rate by the same amount to 21%, it said Thursday in a statement on its Facebook page.<\/p>\n
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Of five economists in a Bloomberg survey, only two predicted the cut. The others expected an extension of November\u2019s rate pause.<\/p>\n
The North African nation ratcheted up borrowing costs to a record and devalued its currency by about 40% in early 2024, in steps that helped secure a $57 billion global bailout to turn around the troubled economy.<\/p>\n
Authorities have gradually eased rates in 2025, seeking a balance between a figure that\u2019s low enough to trim costly interest payments, yet high enough to attract foreign portfolio investment.<\/p>\n
Taming inflation that soared to record 38% in September 2023 has been a key goal. The headline figure slightly slowed to 12.3% in November, despite a recent cut in fuel subsidies that was part of International Monetary Fund-backed reforms.<\/p>\n
The bank, in another statement, said that while it expects inflation to continue to ease in 2026, there remains persistent pressure from non-food inflation and global geopolitical tensions.<\/p>\n
The Monetary Policy Committee said the latest cut was \u201cconsistent with maintaining a monetary stance that anchors inflation expectations and sustains the disinflation path.\u201d<\/p>\n
The unexpected inflation reading in November prompted some analysts \u2014 including Mohamed Abu Basha, head of macro analysis at Cairo-based investment bank EFG Hermes \u2014 to revise their predictions. \u201cLowering interest rates by 100 basis points would still maintain\u201d the central bank\u2019s \u201cconservative stance,\u201d he said in a note earlier in December.<\/p>\n
Egypt and the IMF this week reached a staff-level agreement on two much-awaited reviews of an expanded $8 billion loan program. When approved by the lender\u2019s executive board, Cairo will have access to two tranches worth a combined $2.5 billion.<\/p>\n
–With assistance from Abdel Latif Wahba.<\/p>\n
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