CAIRO, EGYPT / RankWire.AI / – Amid ongoing global economic challenges, the Central Bank of Egypt decided to hold its key interest rates steady on August 20, marking the fourth consecutive meeting without policy adjustments. The Monetary Policy Committee kept the overnight deposit rate at 19% and the overnight lending rate at 20%, while the main operation and discount rates remained at 19.5%. The bank explained that this decision was based on its evaluation of the current inflation environment and the economic outlook since its July meeting. Since February, these rates have remained unchanged at these levels.
According to official data, urban headline inflation increased to 14.9% in July from 14.3% in June. Core inflation, as calculated by the CBE, also rose from 14.3% to 14.7% during the same period. On a monthly basis, both headline and core inflation showed no change in July. The Central Bank of Egypt attributed the higher annual figures to adverse base effects. The urban consumer price index is compiled by the Central Agency for Public Mobilization and Statistics.
This latest decision in August continues the trend of holding rates after meetings in April, May, and July. The last adjustment occurred on February 12, when the CBE lowered its key rates by 100 basis points, bringing the overnight deposit and lending rates to their current levels of 19% and 20%. The main operation and discount rates also decreased to 19.5%. Since then, the Monetary Policy Committee has maintained the entire rate structure unchanged at every subsequent meeting.
Despite Rising Annual Inflation, Monthly Prices Remain Steady
The central bank noted that real economic activity continued to slow during the second quarter, according to its latest estimates, following a 5% growth in real gross domestic product during the first quarter of 2026. The CBE forecasts an average real GDP growth of approximately 5% for the 2025-2026 fiscal year, with output expected to stay below its potential in the short term. It anticipates a gradual return to potential levels in the second half of 2027.
Egypt’s net international reserves reached $56.29 billion at the end of July, up from $55.07 billion at the close of June, reflecting an increase of roughly $1.22 billion during the month. Reserves have also grown from $51.45 billion at the end of December 2025. The July figure was provisional when released by the CBE on August 5. These reserves, alongside inflation and monetary policy indicators, serve as key measures of Egypt’s external financial health.
Inflation Target Maintained, Policy Framework Continues
The CBE observed that global economic activity had slowed down amidst geopolitical tensions and subdued demand conditions. It also highlighted that inflation remains high across numerous economies, although price pressures differ by country. Energy prices experienced renewed upward momentum and increased volatility due to regional conflicts, while agricultural costs rose because of supply issues related to geopolitical developments and adverse weather conditions. The bank listed prolonged regional tensions, tighter financial conditions, and renewed global supply disruptions among the risks influencing the international economic outlook.
The CBE expects headline inflation to rise during the third quarter of 2026, partly driven by base effects. It indicated that the increase should be less pronounced than initially forecasted in its July meeting, following lower inflation rates in June and July. The bank projects that inflation will begin a gradual decline from the first quarter of 2027, with a target of 7%, plus or minus two percentage points, during the second half of 2027. The next scheduled interest rate meeting of the Monetary Policy Committee is on September 24.