CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank announced on August 20 that it would hold its key interest rates steady for a fourth consecutive policy session. The overnight deposit rate stays at 19%, and the overnight lending rate remains at 20%. Both the main operation rate and the discount rate continue to be set at 19.5%. Since a rate cut in February, the Central Bank of Egypt has kept these levels unchanged.
The Monetary Policy Committee last adjusted rates 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 the main operation and discount rates were decreased to 19.5%. Afterward, rates stayed unchanged during meetings in April, May, and July, before the decision to keep them steady again in August.
Inflation figures continued to influence the central bank’s recent decision. In July, annual urban headline inflation rose to 14.9% from 14.3% in June. Meanwhile, annual core inflation increased to 14.7% from 14.3% over the same period. Despite these rises, both headline and core consumer prices showed no monthly change in July. The bank attributed part of the annual increase to unfavorable base effects.
Inflation climbs yearly as monthly price growth stalls
Economic performance also influenced the policy stance. According to the central bank’s data, real gross domestic product grew by 5% in the first quarter of 2026. The bank noted that economic activity slowed during the second quarter. For the 2025-2026 fiscal year, it forecasts an average real GDP growth of approximately 5%. The institution also indicated that output remains below its potential level in the short term.
Egypt’s foreign exchange reserves continued their upward trend through the summer months. Net international reserves reached $56.29 billion at the end of July, up from $55.07 billion in June, marking a roughly $1.22 billion increase in just one month. These reserves are also higher than the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt described the July reserves figure as provisional upon releasing the data.
Focus remains on reducing inflation through policy measures
The central bank’s evaluation of domestic monetary conditions continues to consider the global environment. Officials pointed to slower global economic activity, geopolitical instability, and subdued demand conditions. Elevated inflation persists in many economies, with energy prices experiencing renewed upward pressure and agricultural prices rising due to supply concerns and adverse weather conditions. The Monetary Policy Committee also highlighted tighter financial conditions and disruptions in global supply chains as risks impacting the international outlook.
Looking ahead, the central bank anticipates that annual headline inflation will increase during the third quarter of 2026, partly due to base effects. However, it expects this rise to be smaller than previously projected at its July meeting, following lower inflation rates in June and July. A gradual decline in inflation is forecasted to resume from the first quarter of 2027. The bank’s inflation target remains set at 7%, with an acceptable margin of two percentage points, during the second half of 2027. The upcoming policy meeting is scheduled for September 24.