CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank decided to keep its key interest rates steady on August 20, marking the fourth consecutive policy meeting with unchanged borrowing costs. The overnight deposit rate stayed at 19%, while the overnight lending rate remained at 20%. Both the main operation rate and the discount rate held at 19.5%. These rates have been stable since the central bank’s rate cut in February.
The Monetary Policy Committee last adjusted rates on February 12, when it reduced the policy corridor by 100 basis points. This action lowered the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates decreasing to 19.5%. Following that, policymakers kept rates unchanged at meetings in April, May, and July before reaffirming this stance in August.
Inflation data played a key role in the latest policy evaluation. Annual urban headline inflation climbed to 14.9% in July from 14.3% in June. Correspondingly, annual core inflation increased to 14.7% from 14.3% over the same period. Despite these rises, both headline and core consumer prices did not see any monthly growth in July. The central bank cited unfavorable base effects as partly responsible for the annual increase.
While annual inflation rises, monthly price growth remains stagnant
Economic activity also influenced the policy considerations. According to the central bank, real gross domestic product expanded by 5% in the first quarter of 2026. The bank assessed that activity slowed down during the second quarter. For the 2025-2026 fiscal year, it projects an average real GDP growth of approximately 5%. The institution also indicated that output levels are still below their potential in the near term.
Egypt’s foreign currency reserves continued to grow through the summer months. Net international reserves increased to $56.29 billion at the end of July from $55.07 billion in June, marking a rise of roughly $1.22 billion within 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 upon releasing the data.
The policy focus remains on lowering inflation
The central bank’s assessment also factors in the external environment. Officials pointed to slower economic activity globally, ongoing geopolitical instability, and weakened demand conditions. They highlighted persistent inflation in many economies, noting renewed upward movements in energy prices and rising agricultural costs amid supply disruptions and adverse weather. Additionally, the Monetary Policy Committee identified tighter financial conditions and global supply chain issues as risks impacting the international outlook.
The central bank anticipates that headline inflation will increase during the third quarter of 2026, largely due to base effects. However, it expects this rise to be smaller than previously projected at its July meeting, following lower inflation figures in June and July. A gradual decline in inflation is forecasted to resume from the first quarter of 2027. The bank’s target remains at 7%, with a tolerance band of two percentage points, during the second half of 2027. The upcoming policy meeting is scheduled for September 24.