Egypt's central bank is likely to cut its key interest rates by 100 basis points on Thursday to support growth as inflation cools, a Reuters poll showed.

The median forecast of eight economists surveyed is for the Central Bank of Egypt (CBE) to lower its overnight deposit rate to 23% and its lending rate to 24% at its August 28 Monetary Policy Committee meeting. Current rates stand at 24% and 25%, respectively.

"Inflation has been declining while the Egyptian pound is strengthening against the US dollar, supported by government initiatives to lower commodity prices and the stability of energy prices," said Aya Zoheir of financial consultancy Zilla Holding, adding that the US Federal Reserve is also expected to cut interest rates in September.

Annual urban consumer inflation eased to 13.9% in July from 14.9% in June, driven by falling meat, poultry, fruit and vegetable prices, while monthly inflation slipped 0.5%, statistics agency CAPMAS said on August 10. Core inflation edged up to 11.6% from 11.4%, the central bank said.

"This paves the way for the CBE to cut interest rates by a conservative estimate of 1% or 2%," Zoheir added.

Inflation in Egypt peaked at 38% in September 2023, but has since been on a downward trend. In March 2024, the CBE, helped by an $8-billion International Monetary Fund support package, let the market set the local currency exchange rate. The bank hiked interest rates at the time to tighten monetary policy and slow the expected increase in inflation for almost a year.

Since April this year, the CBE has been gradually lowering its interest rates, which have been fixed since March 2024, unwinding some of its post-devaluation tightening.

The bank cut rates by 225 basis points on April 17 and by 100 basis points on May 22, after a sharp hike on March 6 that accompanied a steep currency adjustment.

The bank kept key interest rates unchanged in its latest MPC meeting on July 10, pausing a trend of rate reductions, following an uptick in inflation.