The Central Bank of Egypt cut its key interest rates by 1 percentage point on Thursday, the fourth reduction this year, as policymakers pointed to easing inflation and improved growth prospects. The move has sparked debate over whether consumers will see tangible relief in prices.
The bank said the decision was driven by a “broad-based decline” in monthly inflation over the past three months and “improving inflation expectations,” along with the fading effects of earlier economic shocks.
Prime Minister Mostafa Madbouly welcomed the move, highlighting that Egypt’s economy grew by 4.4 percent in the fiscal year ending June 30, slightly above the government’s 4.2 percent target. He said stronger growth was already visible across the economy, particularly in sectors such as industry, tourism, and information technology, helping to stabilize prices.
Lawmakers and economists largely backed the decision. Senator Hany Halim called it “a key step to reduce financing burdens on productive sectors,” adding that lower borrowing costs should gradually feed through to lower production costs and, eventually, consumer prices.
Ali al-Dessouki, a member of parliament’s Economic Affairs Committee, told Asharq al-Awsat that repeated rate cuts “signal the success of monetary policy in supporting local production.”
He predicted modest price declines in the months ahead, but “only gradually.”
Economist Karim al-Omda described the cut as “expected and consistent with global moves to ease high interest rates.”
He argued that cheaper credit will encourage investment, stimulate industrial output, and strengthen exports by lowering costs for manufacturers and farmers.
“This will help make Egyptian products more competitive while supporting higher growth,” he said.
Official figures show inflation cooling. Annual consumer price inflation in Egyptian cities slowed for the third consecutive month to 12 percent in August, down from 13.9 percent in July, according to the national statistics agency.
Still, some analysts cautioned that risks remain. Economist Mohamed Anis noted the central bank limited its move to 1 percent, leaving space for future cuts while accounting for potential upward pressure from fuel prices.
The government has signaled that a further increase in fuel costs will come in October, which Madbouly said could be the “last major hike” as subsidies are scaled back.
Al-Omda stressed that moderating inflation does not mean a return to pre-crisis price levels. “It means the pace of increases will slow and return to more normal patterns, without the sharp spikes seen in previous years,” he said, adding that sustaining high growth is essential to keep momentum.
