CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank announced on August 20 that it would keep its key interest rates steady, marking the fourth consecutive policy meeting with unchanged borrowing costs. The overnight deposit rate remains at 19%, and the overnight lending rate stays at 20%. Both the main operation rate and discount rate are held at 19.5%. Since its rate cut in February, the Central Bank of Egypt has maintained these levels.
The last time the Monetary Policy Committee adjusted rates was on February 12, when it reduced the policy corridor by 100 basis points. This move lowered the deposit rate to 19% and the lending rate to 20%, while also decreasing the main operation and discount rates to 19.5%. Subsequent meetings in April, May, and July saw no changes, leading to the current hold in August.
Inflation figures played a key role in the recent policy review. Yearly urban headline inflation went up to 14.9% in July from 14.3% in June. Correspondingly, annual core inflation increased from 14.3% to 14.7%. Despite these increases, both headline and core consumer prices showed no monthly change in July. The central bank attributed part of the annual increase to unfavorable base effects.
Annual inflation continues upward as monthly price gains halt
Economic performance also influenced the decision. According to the central bank, real gross domestic product expanded by 5% in the first quarter of 2026. The bank also noted a moderation in economic activity during the second quarter and projects an average real GDP growth rate of approximately 5% for the 2025-2026 fiscal year. It further highlighted that output remains below its potential level in the short term.
Egypt’s foreign exchange reserves increased over the summer months, with net international reserves reaching $56.29 billion by the end of July, up from $55.07 billion in June. This reflects a monthly rise of about $1.22 billion. The reserves also surpassed the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt described the July reserve figure as provisional when releasing the data.
Focus stays on reducing inflation through policy targets
The central bank’s assessment continues to factor in the global economic situation. Authorities cited a slowdown in economic activity worldwide, geopolitical unrest, and subdued demand conditions. The bank also observed that inflation remains elevated in many countries. Energy prices have faced renewed upward pressure, while agricultural prices increased due to supply concerns and adverse weather conditions. Additionally, tighter financial conditions and disruptions in global supply chains are among the risks highlighted by the Monetary Policy Committee for the international outlook.
Looking ahead, Egypt’s central bank anticipates a rise in annual headline inflation during the third quarter of 2026, partly driven by base effects. The bank expects this increase to be smaller than the projections from its July meeting, following lower inflation in June and July. A gradual decline in inflation is forecasted to resume from the first quarter of 2027. The central bank’s inflation target remains at 7%, with a tolerance band of two percentage points, during the latter half of 2027. The upcoming policy meeting is scheduled for September 24.