Egypt Cuts Interest Rates to 25.5%
The Central Bank of Egypt has reduced its benchmark interest rate by 225 basis points, bringing it down to 25.50% during its April 2025 meeting. This decision marks the end of an 11-month stretch of record-high borrowing costs within the Egyptian financial system. The rate cut is part of a broader strategy to manage inflation expectations, following a decrease in annual headline inflation to 13.6% in March 2025, and a decline in core inflation to 9.4%. Food inflation saw a significant reduction to 6.6%, while non-food inflation decreased to 18.9%. Despite these positive shifts, inflation remains substantially above the central bank's target of 7%, which has a margin of ±2 percentage points. Fiscal consolidation, persisting trade uncertainties, and rising geopolitical tensions still pose threats to the inflation forecast. The Monetary Policy Committee aims to guide inflation towards its 7% ± 2 percentage point target by the fourth quarter of 2026.
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