CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank has kept its key interest rates steady on August 20, marking the fourth consecutive policy meeting without changes. The overnight deposit rate remains at 19%, with the overnight lending rate unchanged at 20%. Meanwhile, the main operation rate and discount rate are both held at 19.5%. These levels have been in place since the bank’s February rate reduction.
The last rate adjustment by the Monetary Policy Committee occurred on February 12, when it decreased the policy corridor by 100 basis points. This move lowered the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates also dropping to 19.5%. The committee then maintained these rates in meetings held in April, May, and July before reaffirming the same stance in August.
Inflation figures played a key role in the latest monetary policy review. In July, annual urban headline inflation increased to 14.9% from 14.3% in June. Correspondingly, annual core inflation rose to 14.7% from 14.3% during the same timeframe. Despite these increases, consumer prices for both headline and core indices did not show monthly growth in July. The central bank pointed to unfavorable base effects as a partial explanation for the annual acceleration.
Yearly inflation climbs as monthly price changes remain flat
Economic activity was also a significant element in the policy considerations. According to the central bank, real gross domestic product expanded by 5% in the first quarter of 2026. The bank projected that economic growth slowed during the second quarter and anticipates an average annual growth rate of roughly 5% for the 2025-2026 fiscal year. It also highlighted that output continues to operate below its potential level in the near term.
Egypt’s foreign exchange reserves saw continued growth over the summer months, with net international reserves reaching $56.29 billion at the end of July. This is an increase from $55.07 billion in June, representing a roughly $1.22 billion rise over one month. The reserves also remain above the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt identified the July reserve figure as provisional upon releasing the data.
Focus remains on combating inflation
The global economic environment continues to influence the central bank’s assessment of domestic monetary conditions. Officials referenced slower economic activity worldwide, geopolitical volatility, and weakening demand signals. The bank also observed persistent high inflation levels across many economies. Energy prices faced renewed upward momentum, while agricultural costs increased due to supply chain issues and adverse weather conditions. Additionally, the Monetary Policy Committee highlighted tighter financial conditions and disruptions in global supply chains as risks affecting the international outlook.
The central bank projects that annual headline inflation will rise during the third quarter of 2026, partly driven by base effects. It expects this increase to be less pronounced than earlier projections made in July, following lower inflation figures for June and July. From the first quarter of 2027 onward, inflation is forecast to gradually decline. The bank’s inflation target remains at 7%, with a tolerance of two percentage points, set for the second half of 2027. The upcoming policy meeting is scheduled for September 24.