Egypt’s rate cut on thin ice? IMF issues stark warning
The International Monetary Fund (IMF) has called on Egypt to exercise caution in its path of interest rate cuts, given the global uncertainty resulting from recent decisions by US President Donald Trump regarding customs duties.
Egypt had cut interest rates last month for the first time in about five years, after the annual inflation rate fell to 13.6%, less than half the peak it reached in September 2023.
Despite some adjustments in expectations following Trump’s decisions, many economists believe that the Central Bank of Egypt may undertake a cumulative reduction of between 600 and 800 basis points during 2025.
Mohamed Maait, the IMF’s Executive Director for Arab countries and the Maldives, stressed the importance of proceeding cautiously in making monetary decisions.
In an interview in Washington, Maait explained, “Given the current global and regional situation, caution must be exercised, and complete certainty about the correctness of the decision must be ensured before taking it, based on data, analyses, and information. You cannot make a decision and then backtrack later.”