CAIRO, EGYPT / RankWire.AI / – On August 20, the Central Bank of Egypt decided to keep its key interest rates at their current levels, marking the fourth consecutive meeting with no changes in monetary policy. The Monetary Policy Committee maintained the overnight deposit rate at 19% and the overnight lending rate at 20%. In addition, the main operation and discount rates remained at 19.5%. The bank explained that this decision was based on its evaluation of ongoing inflation trends and the economic outlook since its July gathering. These rates have persisted since February.
Official data indicates that annual urban headline inflation increased to 14.9% in July from 14.3% in June. Meanwhile, core inflation, as calculated by the CBE, rose from 14.3% to 14.7% over the same period. In July, both headline and core inflation recorded no change on a monthly basis. The Central Bank of Egypt attributed the higher annual figures to unfavorable base effects. Egypt’s urban headline consumer price index is compiled by the Central Agency for Public Mobilization and Statistics.
This August decision represents the fourth time the CBE has paused rate adjustments following meetings in April, May, and July. The last adjustment occurred on February 12, when the bank reduced key rates by 100 basis points, bringing the overnight deposit and lending rates to their current levels of 19% and 20%. Additionally, the main operation and discount rates fell to 19.5%. Since that reduction, the Monetary Policy Committee has maintained the same rate structure in all subsequent meetings.
Inflation climbs annually while prices hold steady monthly
The central bank reported that real economic activity continued to slow during the second quarter, based on its latest estimates. This slowdown followed a 5% growth in real gross domestic product during the first quarter of 2026. The CBE projects that real GDP growth will average approximately 5% over the 2025-2026 fiscal year. It also anticipates that output will remain below its potential level in the near term but is expected to gradually approach it during the latter half of 2027.
By the end of July, Egypt’s net international reserves increased to $56.29 billion from $55.07 billion at the end of June, according to the central bank. This rise of about $1.22 billion during the month marks an increase from $51.45 billion at the close of December 2025. The July reserve figure was provisional when the CBE announced it on August 5. These reserve levels serve as a key indicator of Egypt’s external financial health alongside inflation and monetary policy measures.
Central bank affirms inflation target and policy stance
The CBE highlighted that global economic activity has slowed amid geopolitical uncertainties and softer demand conditions. It also noted that inflation remains elevated in many economies, although price pressures differ across countries. Energy prices faced renewed upward movements and increased volatility due to regional tensions. In addition, agricultural prices rose because of supply issues related to geopolitical developments and adverse weather conditions. The bank identified prolonged regional tensions, tighter financial conditions, and renewed global supply disruptions as some of the risks affecting the international economic outlook.
Looking ahead, the CBE expects headline inflation to rise during the third quarter of 2026, partly influenced by base effects. However, it predicted this increase would be less pronounced than projected in July, following lower inflation figures in June and July. The bank anticipates inflation will begin a gradual decline starting from the first quarter of 2027. Its inflation target remains at 7%, with a tolerance of plus or minus two percentage points, during the latter half of 2027. The next scheduled meeting of the Monetary Policy Committee is set for September 24.