CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank kept its key interest rates steady on August 20, marking the fourth consecutive policy meeting without changes to borrowing costs. The overnight deposit rate held at 19%, and the overnight lending rate stayed at 20%. Both the main operation rate and discount rate remained at 19.5%. These levels have been maintained since the central bank’s rate cut in February.
The last adjustment by the Monetary Policy Committee occurred on February 12, when it reduced the policy corridor by 100 basis points. This move lowered the deposit rate to 19%, the lending rate to 20%, and the main operation and discount rates to 19.5%. Following that, rates remained unchanged during meetings in April, May, July, and now in August.
Inflation figures continue to influence the latest monetary policy decision. Yearly urban headline inflation increased to 14.9% in July from 14.3% in June. Similarly, annual core inflation rose to 14.7% from 14.3% over the same period. Despite these increases, consumer prices for both headline and core indices showed no monthly change in July. The central bank attributed a portion of the annual rise to unfavorable base effects.
Yearly inflation climbs as monthly price growth remains stagnant
Economic growth also played a role in the decision. According to the central bank, real gross domestic product expanded by 5% during the first quarter of 2026. The bank estimated that economic activity slowed in the second quarter. For the entire 2025-2026 fiscal year, an average real GDP growth rate of approximately 5% is projected. The institution also noted that output is still below its potential level in the short term.
Egypt’s foreign exchange reserves continued their upward trend through the summer. As of the end of July, net international reserves reached $56.29 billion, up from $55.07 billion in June. This represents an increase of roughly $1.22 billion within a month. Reserves also surpassed the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt reported the July figure as provisional at the time of data release.
The policy focus remains on reducing inflation
The global economic environment continues to influence the central bank’s assessment of domestic monetary conditions. Officials pointed to slower economic activity worldwide, geopolitical instability, and subdued demand. Additionally, elevated inflation persists in many countries. Energy prices have gained renewed upward momentum, while agricultural costs increased due to supply issues and challenging weather conditions. The Monetary Policy Committee also highlighted tighter financial conditions and global supply disruptions as risks impacting the international outlook.
Looking ahead, the central bank expects headline inflation to increase during the third quarter of 2026, partly influenced by base effects. Nonetheless, it anticipates that this rise will be smaller than initially projected in its July meeting, following lower inflation rates in June and July. A gradual decline in inflation is forecasted to begin from the first quarter of 2027. The target remains set at 7%, with a tolerance band of two percentage points, during the latter half of 2027. The next policy meeting is scheduled for September 24.