The Central Bank of Egypt (CBE) announced a 1% cut in its key interest rates last Thursday, marking a significant step towards easing monetary conditions and supporting economic activity amid signs of moderating inflation. The decision was widely welcomed by lawmakers, business leaders and industry experts, who described it as a timely move to stimulate production, investment and competitiveness across key sectors of the economy. Support for Industry and Production Ahmed Ismail Sabra, Member of Parliament and Chairperson of the Investors Association in the Gamasa Industrial Zone, said the interest-rate cut provides direct support to the industrial sector at a critical juncture. He noted that lower borrowing costs will help manufacturers expand and modernise operations, enhance the competitiveness of Egyptian products in local, regional and international markets, and create additional job opportunities, particularly for young people. Sabra stressed the importance of coordination between monetary and fiscal policies to achieve comprehensive economic and social development, adding that industrial zones—especially Gamasa—are well positioned to benefit from the improved financing environment. Mohamed Adel Hosny, a member of the Industry Committee at the Egyptian Businessmen's Association and the Federation of Egyptian Industries, said the decision reflects a clear state vision to support economic growth and reinforce industry as a primary engine of the national economy. He explained that lower financing costs enable companies to upgrade production lines, expand capacity and increase exports, while strengthening the competitiveness of Egyptian products. Hosny also highlighted the government's focus on small and medium-sized enterprises (SMEs) as a key driver of job creation and balanced development across governorates. Relief for the Private Sector Amr Fotouh, Chairperson of the Entrepreneurship and SMEs Committee at the Egyptian-Lebanese Business Association, described the rate cut as a major relief for the private sector, encouraging both the expansion of existing projects and the launch of new investments. He said reduced borrowing and operating costs would support market stability and stimulate trade, production and exports. Fotouh noted that Egypt's merchandise exports reached around $45bn in 2024 and are expected to exceed $50bn by the end of 2025, adding that easing financing burdens would further strengthen industry as a key source of foreign currency. Ahmed El-Zayat, a member of the Egyptian Businessmen's Association, said the return to an interest-rate cutting cycle aligns with the gradual decline in inflation and the CBE's target of steering inflation towards 7% by the fourth quarter of 2026. He described the move as a positive signal of economic recovery, encouraging investment over savings, lowering borrowing costs, and supporting job creation, exports and foreign investment inflows. Impact on the Real Estate Sector Urban planning expert Mohamed Mostafa El-Qady said cumulative interest-rate cuts exceeding 7% during 2025 have had mixed but largely positive effects on the market, particularly by providing indirect stimulus to the real estate sector. He explained that extended payment plans offered by developers effectively represent an indirect price reduction, while the maturity of high-yield savings certificates could redirect savings towards property investments in 2026, potentially driving higher demand and prices in the second half of the year. Abeer Essam El-Din, Chairwoman of the Arab Council for Businesswomen and a board member of the Egyptian Federation of Investor Associations, said monetary easing policies clearly support real estate development, especially for small developers. She added that declining returns on savings certificates enhance the appeal of real estate as a store of value, with expectations of stronger sales and sector growth in 2026. Positive Tax and Trade Implications Ramy Fathallah, Chairperson of the Tax and Finance Committee at the Egyptian-Lebanese Business Association, said the interest-rate cut reflects improving macroeconomic indicators and sends a strong signal of confidence in Egypt's ability to balance inflation control with economic growth. He noted that lower financing costs would ease pressure on industrial and agricultural companies, stimulate economic activity and indirectly contribute to higher and more sustainable tax revenues, while reinforcing investor confidence. Despite welcoming the decision, Mohamed Saada, Secretary-General of the Federation of Egyptian Chambers of Commerce and Chair of the Port Said Chamber, said interest rates remain relatively high and require further reductions to achieve a full financing breakthrough. Saada added that the impact of the cut is expected to become more evident over the next two months, with relative price stability or slight declines, improved purchasing power and stronger economic momentum. He noted that the automotive, real estate and food industries are among the sectors likely to benefit most, alongside increased investment inflows into the local market.
