CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank kept its key interest rates steady on August 20, marking a fourth consecutive policy meeting without changes in borrowing costs. The overnight deposit rate held at 19%, while the overnight lending rate remained at 20%. Both the main operation rate and discount rate continued to stand at 19.5%. These levels have been maintained since the rate cut implemented 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 decreased the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates also lowered to 19.5%. Following this, policymakers held rates steady during meetings in April, May, and July before again opting to maintain the current levels in August.
Inflation figures played a crucial role in the latest monetary policy review. In July, annual urban headline inflation increased to 14.9% from 14.3% in June. Concurrently, annual core inflation rose to 14.7% from 14.3%. Nonetheless, both headline and core consumer prices showed no monthly growth in July. The central bank partly attributed the annual increase to unfavorable base effects.
Rising annual inflation amid stagnant monthly prices
Economic performance also influenced the policy stance. According to the central bank’s data, real gross domestic product expanded by 5% in the first quarter of 2026. The bank indicated that economic activity slowed during the second quarter. It projects an average real GDP growth rate of approximately 5% for the 2025-2026 fiscal year. The institution also noted that output remains below its potential in the near term.
Egypt’s foreign currency reserves continued their upward trajectory over the summer months. Net international reserves reached $56.29 billion at the end of July, up from $55.07 billion in June, representing a monthly increase of roughly $1.22 billion. Reserves also surpassed the $51.45 billion level reported at the end of December 2025. The Central Bank of Egypt noted that the July figure is provisional at the time of data release.
The policy focus remains on reducing inflation
The central bank’s evaluation continues to consider the global economic environment. Officials pointed to slower global economic activity, geopolitical instability, and waning demand. Additionally, they highlighted persistent inflation across many countries, driven by renewed upward pressure on energy prices and rising agricultural costs due to supply issues and adverse weather conditions. The Monetary Policy Committee also identified tighter financial conditions and global supply disruptions as key risks shaping the international outlook.
Looking ahead, the central bank anticipates that headline inflation will increase during the third quarter of 2026, partly because of base effects. It noted that this rise should be less pronounced than previously projected at its July meeting, given the lower inflation figures for June and July. The bank expects inflation to gradually decline starting from the first quarter of 2027. Its target remains at 7%, with a tolerance band of two percentage points, for the latter half of 2027. The upcoming policy meeting is scheduled for September 24.