The Central Bank of Egypt has cut interest rates by 0.25 per cent.

From 22 September, the overnight deposit rate is 8.25 per cent and the overnight lending rate is 9.75 per cent.

The cut was smaller than previous reductions of 0.5 per cent.

In August, Egypt’s inflation rate fell to its lowest level in a year and eight months at 9 per cent, down from 9.9 per cent in July, and down from its peak of 23.6 per cent in August 2008.

The Egyptian economy grew by 4.7 per cent in the 2008-09 financial year. The growth rate was better than the government had expected at the start of the financial year, but lower than the 7 per cent average recorded during the three preceding years. 

In a statement issued on 17 September, the bank’s Monetary Policy Committee (MPC) said it would not cut rates again.

“The MPC assesses that the current level of policy interest rate is appropriate and supportive of the economic recovery while consistent with maintaining underlying inflation within the central bank’s comfort zone,” it said.

Egyptian investment bank EFG-Hermes does not expect any more cuts in 2009 and did not expect an increase in rates until well into 2010 at the earliest.