CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank maintained its key interest rates on August 20, marking the fourth consecutive policy meeting with no adjustments to borrowing costs. The overnight deposit rate was held at 19%, and the overnight lending rate remained at 20%. Meanwhile, both the main operation rate and discount rate stayed steady at 19.5%. These levels have been in place since the February rate cut by the Central Bank of Egypt.
Looking back to February 12, the Monetary Policy Committee made its last rate adjustment, reducing the policy corridor by 100 basis points. This move lowered the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates both adjusted to 19.5%. Since then, policymakers have kept rates unchanged in meetings held in April, May, and July, before maintaining the same stance in August.
Inflation figures played a crucial role in the most recent policy review. In July, annual urban headline inflation climbed to 14.9% from 14.3% in June. Concurrently, annual core inflation rose to 14.7% from 14.3%. However, in July, both headline and core consumer prices showed no monthly growth. The central bank linked part of the annual increase to unfavorable base effects.
Yearly inflation climbs amid stagnant monthly prices
The economic activity was also a significant factor in the policy discussion. According to the central bank’s data, real gross domestic product expanded by 5% in the first quarter of 2026. The bank also projected that economic momentum slowed during the second quarter. Overall, it expects an average real GDP growth rate of about 5% for the 2025-2026 fiscal year. Additionally, the bank noted that output remains below its potential level in the near term.
Over the summer, Egypt’s foreign currency reserves continued their upward trend. As of the end of July, net international reserves reached $56.29 billion, up from $55.07 billion in June. This increase of approximately $1.22 billion in just one month surpassed the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt reported the July reserve figure as provisional upon releasing the data.
The primary focus remains on lowering inflation
In its assessment, the central bank took into account the ongoing global environment. Officials pointed to slower economic activity worldwide, geopolitical instability, and declining demand. They also highlighted persistent inflation across many countries. Energy prices experienced renewed upward pressure, while agricultural costs increased amid supply concerns and challenging weather patterns. The Monetary Policy Committee also recognized tighter financial conditions and disruptions in global supply chains as risks affecting the international outlook.
Looking ahead, the central bank anticipates that annual headline inflation will rise during the third quarter of 2026, partly due to base effects. Nevertheless, it expects this increase to be smaller than the projections made at its July meeting, following lower inflation in June and July. The bank forecasts a gradual decline in inflation starting from the first quarter of 2027. Its inflation target remains 7%, with a tolerance band of two percentage points, to be achieved during the second half of 2027. The upcoming policy meeting is scheduled for September 24.