CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank on August 20 held its key interest rates steady for the fourth consecutive policy meeting, leaving borrowing costs unchanged. The overnight deposit rate stayed at 19%, while the overnight lending rate remained at 20%. Both the main operation rate and discount rate continued to be set at 19.5%. These levels have been maintained since the rate cut implemented in February.
The last time rates were adjusted was on February 12, when the Monetary Policy Committee reduced the policy corridor by 100 basis points. This move lowered the deposit rate to 19% and the lending rate to 20%. Additionally, the main operation and discount rates were decreased to 19.5%. Following that, policymakers kept rates unchanged during meetings in April, May, and July before reaffirming the same decision in August.
Inflation data played a key role in the latest policy review. Yearly urban headline inflation increased to 14.9% in July from 14.3% in June. Similarly, annual core inflation climbed to 14.7% from 14.3% in the same period. Despite this, both headline and core consumer prices showed no monthly change in July. The central bank partly attributed the yearly increase to unfavorable base effects.
Rising annual inflation occurs alongside stagnant monthly prices
Economic growth was also a consideration in the decision-making process. According to the central bank, real gross domestic product expanded by 5% in the first quarter of 2026. The bank also noted a moderation in economic activity during the second quarter and expects an average real GDP growth of around 5% for the fiscal year 2025-2026. The institution further mentioned that output remains below its potential level in the near term.
Egypt’s foreign exchange reserves continued their upward trend over the summer months. As of the end of July, net international reserves reached $56.29 billion, up from $55.07 billion in June, marking an increase of roughly $1.22 billion within one month. Reserves also exceeded the $51.45 billion recorded at the close of December 2025. The Central Bank of Egypt classified the July reserve figure as provisional when publishing the data.
Focus remains on reducing inflationary pressures
The central bank’s evaluation continues to consider the global economic landscape. Officials pointed to slowing economic activity worldwide, geopolitical uncertainties, and declining demand conditions. They also highlighted persistent inflation in many economies, with energy prices experiencing renewed upward movement. Agricultural prices increased due to supply concerns and adverse weather conditions. The Monetary Policy Committee also identified tighter financial conditions and disruptions in global supply chains as risks to the international outlook.
The central bank anticipates that annual headline inflation will rise during the third quarter of 2026, partly driven by base effects. Nevertheless, it expects this increase to be smaller than previously forecast in July, following lower inflation readings in June and July. The bank projects inflation will gradually decline from the first quarter of 2027 onward. Its inflation target remains at 7%, with a tolerance band of two percentage points, throughout the second half of 2027. The next policy meeting is scheduled for September 24.