CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank maintained its key interest rates on August 20, marking the fourth consecutive policy meeting with no change in borrowing costs. The overnight deposit rate stayed at 19%, while the overnight lending rate remained at 20%. Both the main operation rate and the discount rate held steady at 19.5%. Since the rate cut implemented in February, these levels have been kept unchanged by the Central Bank of Egypt.
The last adjustment by the Monetary Policy Committee occurred on February 12, when it reduced 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 decreasing to 19.5%. After that, policymakers paused, holding rates steady during meetings in April, May, and July, before reaffirming the unchanged stance in August.
Inflation data continued to influence the latest monetary policy decisions. In July, annual urban headline inflation rose to 14.9% from 14.3% in June. Similarly, annual core inflation increased to 14.7% from 14.3% within the same period. Notably, both headline and core consumer prices did not show any monthly growth in July. The central bank noted that part of the annual increase was due to unfavorable base effects.
Yearly inflation accelerates as monthly prices stabilize
Economic performance also played a significant role in the policy outlook. According to the central bank’s data, real gross domestic product expanded by 5% during the first quarter of 2026. The bank suggested that economic activity slowed down somewhat in the second quarter and projected an average real GDP growth rate of about 5% for the fiscal year 2025-2026. Additionally, it indicated that current output levels are still below the economy’s potential in the near term.
Egypt’s foreign currency reserves continued their upward trend during the summer months. As of the end of July, net international reserves reached $56.29 billion, up from $55.07 billion in June, representing an approximate increase of $1.22 billion in just one month. These reserves also surpassed the $51.45 billion reported at the close of December 2025. The Central Bank of Egypt issued the July reserve figure as provisional when publishing the data.
The central objective remains to curb inflation
Global economic conditions continue to influence the central bank’s assessment of Egypt’s monetary environment. Officials pointed to a slowdown in international economic activity, ongoing geopolitical uncertainties, and weakening demand worldwide. The bank also highlighted persistent inflationary pressures in many economies, with energy prices climbing again and agricultural costs rising due to supply issues and adverse weather. Tighter financial conditions and global supply chain disruptions were identified as additional risks shaping the international outlook.
Looking ahead, the central bank anticipates that headline inflation will increase during the third quarter of 2026, largely driven by base effects. Although the rise is expected to be smaller than previously projected in July, following lower inflation in June and July, it is forecasted to begin a gradual decline starting in the first quarter of 2027. The inflation goal remains 7%, with a tolerance band of two percentage points, targeted for the second half of 2027. The upcoming policy meeting is scheduled for September 24.