CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt decided on August 20 to keep its key interest rates steady, marking the fourth consecutive meeting with no change in policy. The Monetary Policy Committee maintained the overnight deposit rate at 19% and the overnight lending rate at 20%, while also holding the main operation and discount rates at 19.5%. The bank stated that this decision was based on its evaluation of current inflation trends and the economic outlook since its July meeting. Since February, these rates have remained at their current levels.
Official figures show that annual urban inflation increased to 14.9% in July from 14.3% in June. Over the same period, core inflation, as calculated by the CBE, rose from 14.3% to 14.7%. In July, both headline and core inflation registered no monthly change. The Central Bank of Egypt noted that adverse base effects contributed to the higher yearly readings. The urban consumer price index for Egypt is compiled by the Central Agency for Public Mobilization and Statistics.
This August decision represents the fourth time in a row that rates have been held since meetings in April, May, and July. The last change in policy rates occurred 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%. The main operation and discount rates also fell to 19.5%. Since that reduction, the Monetary Policy Committee has consistently maintained the full rate structure without further adjustments.
Inflation climbs annually while monthly figures stay stable
According to the bank, real economic activity continued to slow during the second quarter, based on its latest assessments. This follows a 5% growth in real gross domestic product in the first quarter of 2026. The CBE anticipates an average real GDP growth rate of about 5% for the 2025-2026 fiscal year and expects output to remain below its potential in the near term. The bank projects that, during the second half of 2027, output will gradually approach its potential level.
By the end of July, Egypt’s net international reserves stood at $56.29 billion, according to the central bank, up from $55.07 billion at the end of June—a monthly increase of approximately $1.22 billion. Reserves have also risen from $51.45 billion at the end of December 2025. The July reserve figure was provisional when announced on August 5. These reserve data serve as another indicator of Egypt’s external financial health, alongside inflation and monetary policy measures.
Bank affirms inflation targets and maintains policy strategy
The CBE highlighted that global economic activity has slowed amid geopolitical tensions and softer demand. It also pointed out that inflation remains high in many economies, although the degree of price pressures varies. Energy prices have experienced renewed upward trends and increased volatility due to regional conflicts. Agricultural costs have risen because of supply issues tied to geopolitical developments and adverse weather conditions. The bank listed prolonged regional tensions, tighter financial conditions, and renewed global supply disruptions among the risks facing the international economy.
For the third quarter of 2026, the CBE forecasts an increase in annual headline inflation, partly driven by base effects. The bank expects this rise to be less than initially projected in its July meeting, following lower inflation rates observed in June and July. It anticipates that inflation will begin a gradual decline starting in the first quarter of 2027. The inflation target remains set 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 to review interest rates is on September 24.
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