CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank kept its key interest rates steady on August 20, marking the fourth consecutive policy meeting with unchanged borrowing costs. The overnight deposit rate stayed at 19%, while the overnight lending rate remained at 20%. Both the main operation rate and the discount rate were also held at 19.5%. Since its rate cut in February, the Central Bank of Egypt has maintained these levels.
The last rate adjustment by the Monetary Policy Committee occurred on February 12, when it reduced the policy corridor by 100 basis points, lowering the deposit rate to 19% and the lending rate to 20%. This move also decreased the main operation and discount rates to 19.5%. Following that, policymakers kept rates unchanged in meetings held in April, May, and July, before repeating this stance in August.
Inflation figures played a significant role in the recent policy evaluation. Yearly urban headline inflation climbed to 14.9% in July from 14.3% in June. Simultaneously, annual core inflation increased to 14.7% from 14.3%. Despite the rise in annual inflation, both headline and core consumer prices showed no monthly growth in July. The central bank linked part of the annual increase to unfavorable base effects.
Rising annual inflation amid stagnant monthly prices
Economic performance was also a key consideration. The central bank’s data indicated that real gross domestic product expanded by 5% in the first quarter of 2026. It noted that economic activity slowed down during the second quarter and projected an average real GDP growth rate of approximately 5% for the 2025-2026 fiscal year. The institution further remarked that current output levels are still below potential in the near term.
Egypt’s foreign exchange reserves continued their upward trend over the summer months. Net international reserves increased to $56.29 billion by the end of July, up from $55.07 billion in June, representing a $1.22 billion gain within one month. Reserves also exceeded the $51.45 billion recorded at the close of December 2025. The Central Bank of Egypt noted that the July figure is provisional in its published data.
The bank’s primary aim remains reducing inflation
International factors continue to influence the bank’s assessment of domestic monetary conditions. Officials pointed to slower global economic activity, geopolitical instability, and declining demand. They also highlighted elevated inflation levels across numerous economies. Price pressures in energy have renewed, and agricultural prices have risen due to supply challenges and adverse weather. Additionally, the Monetary Policy Committee identified tighter financial conditions and disruptions in global supply chains as risks to the international outlook.
The central bank anticipates that annual headline inflation will increase during the third quarter of 2026, mainly due to base effects. It expects this rise to be smaller than the projections from its July meeting, following lower inflation readings in June and July. The institution foresees a gradual decline in inflation starting from the first quarter of 2027. The target inflation rate remains 7%, with a tolerance band of two percentage points, for the second half of 2027. The upcoming policy meeting is scheduled for September 24.