CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank kept its key interest rates unchanged on August 20, marking a fourth consecutive policy meeting with no change in borrowing costs. The overnight deposit rate stayed at 19%, and the overnight lending rate remained at 20%. The main operation rate and discount rate both held steady at 19.5%. These levels have been maintained since the February rate cut by the Central Bank of Egypt.
The last rate adjustment by the Monetary Policy Committee occurred on February 12, when it lowered the policy corridor by 100 basis points. This move reduced the deposit rate to 19% and the lending rate to 20%, while the main operation and discount rates dropped to 19.5%. Following that, policymakers held rates steady in meetings held in April, May, and July, before reaffirming the unchanged stance in August.
Inflation data was central to the recent policy review. Yearly urban headline inflation increased to 14.9% in July from 14.3% in June, while core inflation also rose to 14.7% from 14.3% during the same period. Despite this, both headline and core consumer prices showed no monthly growth in July. The central bank linked part of the annual rise to unfavorable base effects.
Annual inflation climbs as monthly price increases halt
The state of economic activity also influenced the decision. According to the central bank, real gross domestic product expanded by 5% in the first quarter of 2026. The bank also estimated that economic activity slowed during the second quarter and expects an average real GDP growth rate of around 5% for the 2025-2026 fiscal year. It further noted that output remains below its potential level in the near term.
Egypt’s foreign currency reserves saw continued growth through the summer months. Net international reserves reached $56.29 billion at the end of July, up from $55.07 billion in June, reflecting an increase of approximately $1.22 billion in one month. Reserves also exceeded the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt issued the July figure as provisional when releasing the data.
Focus remains on reducing inflation
The global economic environment continues to be a key factor in the central bank’s evaluation of domestic monetary conditions. Authorities pointed to slower economic activity worldwide, geopolitical uncertainties, and subdued demand. The bank also observed high inflation levels across many economies. Rising energy prices and increased agricultural costs due to supply issues and challenging weather conditions have added to inflationary pressures. Additionally, tighter financial conditions and disruptions in global supply chains were identified as risks impacting the international outlook.
The central bank projects that annual headline inflation will increase during the third quarter of 2026, partly due to base effects. It expects this rise to be smaller than initially projected at its July meeting, following lower inflation rates in June and July. A gradual decline in inflation is forecast starting from the first quarter of 2027. The bank’s inflation target remains 7%, with an acceptable margin of two percentage points, for the second half of 2027. The upcoming policy meeting is scheduled for September 24.