CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank kept its primary interest rates steady on August 20, marking a fourth consecutive policy meeting without changes to borrowing costs. The overnight deposit rate stayed at 19%, while the overnight lending rate remained at 20%. Both the main operation rate and discount rate were held at 19.5%. Since its February rate reduction, the Central Bank of Egypt has maintained these levels.
The last adjustment by the Monetary Policy Committee occurred on February 12, when rates were lowered by 100 basis points within the policy corridor. This adjustment decreased the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates also dropping to 19.5%. Subsequent meetings in April, May, and July saw no change in rates, and the decision was repeated in August.
Inflation figures were central to the recent policy evaluation. 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% during the same period. Despite these increases, July saw no monthly change in both headline and core consumer prices. The central bank linked part of the annual increase to unfavorable base effects.
Annual inflation climbs as monthly price growth remains stagnant
Economic performance also influenced policy decisions. The central bank’s data shows that real gross domestic product expanded by 5% in the first quarter of 2026. During the second quarter, economic activity slowed down, but an average annual growth rate of about 5% is projected for the fiscal year 2025-2026. The bank also indicated that current output levels are below potential in the short term.
Foreign currency reserves in Egypt continued to grow through the summer. Net international reserves reached $56.29 billion at the end of July, up from $55.07 billion in June, representing an increase of roughly $1.22 billion in just one month. Reserves also surpassed the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt noted that the July figure was provisional upon release of the data.
Focus remains on reducing inflation
The central bank’s assessment of domestic monetary conditions continues to consider the global environment. Officials pointed to slower economic activity worldwide, geopolitical instability, and weaker demand trends. Elevated inflation levels across numerous economies are also noted, with energy prices experiencing renewed upward pressure. Additionally, agricultural prices have increased due to supply issues and adverse weather conditions. Tighter financial conditions and disruptions in global supply chains are among the international risks identified by the Monetary Policy Committee.
Looking ahead, the central bank expects headline inflation to rise during the third quarter of 2026, partly driven by base effects. However, this increase is anticipated to be less pronounced than previously projected in July, following lower inflation rates in June and July. A gradual decline in inflation is forecasted to restart from the first quarter of 2027. The goal remains a 7% inflation rate, with a tolerance band of two percentage points, during the latter half of 2027. The upcoming policy meeting is scheduled for September 24.