CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt opted to keep its key interest rates steady on August 20, marking the fourth consecutive meeting where the policy remained unchanged. The Monetary Policy Committee maintained the overnight deposit rate at 19% and the overnight lending rate at 20%, while also holding the main operation and discount rates at 19.5%. The decision reflected their assessment of current inflation trends and the economic outlook since the previous July gathering, with rates having stayed at these levels since February.
Official figures show that annual urban inflation increased to 14.9% in July, up from 14.3% in June. During the same period, core inflation, as calculated by the CBE, rose from 14.3% to 14.7%. On a month-to-month basis, both headline and core inflation registered no change in July. The CBE attributed these higher annual readings partly to unfavorable base effects. Egypt’s urban consumer price index is compiled by the Central Agency for Public Mobilization and Statistics.
This latest decision in August marks a fourth consecutive hold after meetings in April, May, and July. The last time the CBE adjusted its policy rates was on February 12, when it reduced key rates by 100 basis points, bringing the overnight deposit and lending rates to their current levels of 19% and 20%. The main operation rate and discount rate also declined to 19.5%. Since that reduction, the Monetary Policy Committee has maintained the entire rate structure unchanged at each subsequent meeting.
Annual inflation rises despite stable monthly prices
According to the central bank, real economic activity continued to slow during the second quarter, based on its latest estimates, following a 5% increase in real gross domestic product during the first quarter of 2026. The CBE forecasts that real GDP growth will average around 5% across the 2025-2026 fiscal year and expects output to remain below potential in the near future, with a gradual convergence toward its optimal level anticipated during the latter half of 2027.
At the end of July, Egypt’s net international reserves reached $56.29 billion, according to the central bank, up from $55.07 billion at the end of June, marking a monthly increase of about $1.22 billion. These reserves have also risen from $51.45 billion at the close of December 2025. The July figure was provisional when released by the CBE on August 5, serving as an important indicator of Egypt’s external financial health alongside inflation and monetary policy measures.
Central bank affirms inflation target and policy stance amid global economic shifts
The CBE highlighted that worldwide economic activity has slowed due to geopolitical uncertainties and weakening demand. It also noted that inflation remains high across many economies, although the degree of price pressures varies between countries. Energy prices faced renewed upward momentum and increased volatility driven by regional tensions, while agricultural prices rose because of supply concerns linked to geopolitical developments and adverse weather conditions. Among the risks to the global economic outlook cited by the bank are prolonged regional conflicts, tighter financial conditions, and renewed disruptions to global supply chains.
The CBE projects that headline inflation will rise during the third quarter of 2026, partly driven by base effects, but expects this increase to be less pronounced than initially forecast in its July meeting after observing lower inflation in June and July. The bank anticipates a gradual decline in inflation starting from the first quarter of 2027, with its target remaining at 7%, plus or minus two percentage points, during the second half of that year. The next scheduled interest rate review by the Monetary Policy Committee is on September 24.