CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank maintained its key interest rates on August 20, leaving borrowing costs unchanged for the fourth straight policy session. The overnight deposit rate stayed at 19%, and the overnight lending rate remained at 20%. Both the main operation rate and the discount rate were held steady at 19.5%. Since its February rate cut, the Central Bank of Egypt has kept these levels intact.
The last adjustment by the Monetary Policy Committee occurred on February 12, when they reduced the policy corridor by 100 basis points. This move lowered the deposit rate to 19% and the lending rate to 20%, while the main operation and discount rates both decreased to 19.5%. Subsequently, rates stayed unchanged during meetings in April, May, and July before the decision was repeated in August.
Inflation figures played a significant role in the latest policy review. Yearly urban headline inflation rose to 14.9% in July from 14.3% in June. Similarly, annual core inflation increased to 14.7% from 14.3% in the same period. Despite these increases, consumer prices—both headline and core—did not show any monthly growth in July. The central bank attributed part of the annual increase to adverse base effects.
Inflation climbs annually as monthly price increases pause
Economic performance also influenced the policy stance. According to the central bank’s data, real gross domestic product expanded by 5% during the first quarter of 2026. The bank projected a moderation in economic activity during the second quarter. For the 2025-2026 fiscal year, it anticipates an average real GDP growth of approximately 5%. The central bank also noted that output remains below its potential level in the near future.
Egypt’s foreign currency reserves saw continued growth through the summer months. As of the end of July, net international reserves reached $56.29 billion, up from $55.07 billion in June, marking an increase of roughly $1.22 billion in just one month. 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 remains on reducing inflation through policy measures
The global economic environment continues to influence the central bank’s assessment of domestic monetary conditions. Authorities pointed to slower economic activity worldwide, geopolitical tensions, and subdued demand conditions. Elevated inflation levels across numerous economies were also noted. Energy prices faced renewed upward pressure, while agricultural prices increased amid supply concerns and adverse weather. The Monetary Policy Committee highlighted tighter financial conditions and disruptions to global supply chains among the risks shaping the international outlook.
The central bank forecasts that annual headline inflation will rise during the third quarter of 2026, partly driven by base effects. It expects this increase to be less pronounced than projections from its July meeting, following lower inflation readings in June and July. A gradual decline in inflation is anticipated to restart from the first quarter of 2027. The bank’s inflation target remains 7%, with a tolerance band of two percentage points, during the second half of 2027. The next policy gathering is set for September 24.