CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt maintained its key interest rates at their current levels on August 20, marking the fourth consecutive meeting with no rate adjustments. The Monetary Policy Committee kept the overnight deposit rate at 19% and the overnight lending rate at 20%, while also holding the main operation and discount rates steady at 19.5%. The bank stated that this decision was based on its evaluation of the prevailing inflation trends and the economic outlook since its July meeting. These rates have been unchanged since February.
According to official figures, annual urban inflation increased to 14.9% in July from 14.3% in June. The CBE’s measure of core inflation also rose to 14.7% from 14.3% over the same period. Both headline and core inflation showed no change on a monthly basis in July. The Central Bank of Egypt explained that unfavorable base effects contributed to the higher annual figures. The urban consumer price index is produced by the Central Agency for Public Mobilization and Statistics.
This August decision continues a pattern of holding rates steady after meetings in April, May, and July. The last time policy rates were altered was on February 12, when the CBE reduced key rates by 100 basis points, bringing the overnight deposit and lending rates to their current levels of 19% and 20%, respectively. The main operation and discount rates also decreased to 19.5%. Since that reduction, the Monetary Policy Committee has maintained the entire rate structure unchanged at every subsequent meeting.
Inflation shows yearly increase while monthly prices stay stable
The bank indicated that actual economic activity continued to slow during the second quarter, according to its latest estimates, following a 5% growth rate in the first quarter of 2026. The CBE forecasts an average real GDP growth of about 5% throughout the 2025-2026 fiscal year and expects output to remain below its potential in the near term. It projects a gradual convergence toward potential output during the second half of 2027.
Egypt’s net international reserves reached $56.29 billion at the end of July, up from $55.07 billion at the close of June, representing a rise of approximately $1.22 billion during the month. Reserves have also increased from $51.45 billion at the end of December 2025. The July data was provisional when the CBE released it on August 5, providing a current indicator of Egypt’s external financial position alongside inflation and monetary policy measures.
Inflation target and policy stance remain unchanged
The CBE noted that global economic activity has slowed due to geopolitical instability and weaker demand. It also mentioned that inflation remains high across numerous economies, though price pressures differ among nations. Energy prices experienced renewed upward movement and increased volatility amid regional tensions, while agricultural prices rose owing to supply concerns related to geopolitical developments and adverse weather conditions. The bank cited prolonged regional tensions, tighter financial conditions, and renewed global supply disruptions as key risks to the international economic outlook.
The CBE anticipates that headline inflation will rise during the third quarter of 2026, partly due to base effects. It expects this increase to be less pronounced than the projections made at its July meeting, following lower inflation figures in June and July. The bank predicts that inflation will gradually decline starting from the first quarter of 2027. Its target remains at 7%, with a tolerance of plus or minus two percentage points, for the second half of 2027. The next scheduled meeting of the Monetary Policy Committee is on September 24.