CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt maintained its key interest rates unchanged on August 20, marking the fourth consecutive meeting without any policy adjustments. The Monetary Policy Committee kept the overnight deposit rate at 19% and the overnight lending rate at 20%, while also holding the main operation and discount rates steady at 19.5%. The bank stated that this decision was based on its evaluation of current inflation trends and economic outlook since its July meeting. These rates have stayed at these levels since February.
Inflation in urban areas increased to 14.9% in July from 14.3% in June, according to official statistics. The CBE’s measure of core inflation also rose to 14.7% from 14.3% during the same period. Both headline and core inflation showed no change on a monthly basis in July. The Central Bank of Egypt attributed higher annual figures to unfavorable base effects. Egypt’s urban consumer price index is produced by the Central Agency for Public Mobilization and Statistics.
The recent decision to hold rates in August marks the fourth consecutive pause, following meetings in April, May, and July. The last time the CBE adjusted its policy rates was on February 12, when it cut 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 decreased to 19.5%. Since that reduction, the Monetary Policy Committee has kept the entire rate structure unchanged at each subsequent meeting.
Annual inflation increases despite stable monthly prices
Inflation figures indicate that real economic activity continued to slow during the second quarter, according to the latest estimates by the central bank. This slowdown followed a 5% growth in real gross domestic product (GDP) during the first quarter of 2026. The CBE projects an average real GDP growth rate of about 5% throughout the 2025-2026 fiscal year. It also anticipates output remaining below its potential in the near term, with a gradual convergence expected during the second half of 2027.
Reserves at Egypt’s central bank reached $56.29 billion by the end of July, up from $55.07 billion at the close of June, reflecting an increase of approximately $1.22 billion for the month. Reserves have grown from $51.45 billion at the end of December 2025. The July reserve figure was provisional when the CBE announced it on August 5. These reserves serve as another current indicator of Egypt’s external financial position, alongside inflation and monetary policy data.
Inflation target remains unchanged, alongside the policy framework
The CBE highlighted that global economic activity has slowed amid geopolitical tensions and weaker demand. Despite the persistent inflation across many economies, the degree of price pressures varies. Energy prices have experienced renewed upward movement and increased volatility due to regional tensions, while agricultural prices have also risen because of supply concerns linked to geopolitical developments and adverse weather conditions. The bank listed ongoing regional tensions, tighter financial conditions, and renewed global supply disruptions as risks impacting the international economic outlook.
The CBE predicts that headline inflation will rise during the third quarter of 2026, largely driven by base effects. However, it expects this increase to be less severe than initially projected in July, following lower inflation rates in June and July. The bank forecasts a return to a gradual decline in inflation starting from the first quarter of 2027, with a target of 7%, plus or minus two percentage points, for the second half of 2027. The next scheduled meeting of the Monetary Policy Committee is set for September 24.