CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank kept its key interest rates steady on August 20, marking the fourth consecutive policy meeting with unchanged borrowing costs. The overnight deposit rate held at 19%, while the overnight lending rate stayed at 20%. Both the main operation rate and the discount rate also remained at 19.5%, levels that have been in place since the February rate reduction.
The last adjustment by the Monetary Policy Committee occurred on February 12, when they reduced the policy corridor by 100 basis points. This move decreased the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates both lowered to 19.5%. Subsequently, policymakers maintained these rates through meetings in April, May, and July, before reaffirming the unchanged stance in August.
Inflation figures played a key role in the latest policy review. Yearly urban headline inflation increased to 14.9% in July, up from 14.3% in June. Similarly, annual core inflation rose to 14.7% from 14.3% during the same period. Despite this, both headline and core consumer prices showed no monthly change in July. The central bank explained that part of the annual increase was due to unfavorable base effects.
Rise in annual inflation coincides with stagnation in monthly price growth
Economic activity was also a significant element in the policy considerations. According to the central bank’s data, real gross domestic product grew by 5% during the first quarter of 2026. The bank observed that economic growth slowed during the second quarter and projects an average annual real GDP growth of approximately 5% for the fiscal year 2025-2026. It also indicated that output remains below its potential in the near term.
Egypt’s foreign currency reserves continued their upward trend through the summer months. As of the end of July, net international reserves reached $56.29 billion, an increase from $55.07 billion in June. This growth of around $1.22 billion within a month pushed reserves above the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt classified the July reserve figure as provisional when publishing the data.
Focus on inflation reduction remains the primary policy objective
The central bank’s assessment continues to factor in the global economic environment. Authorities highlighted slower global economic activity, geopolitical uncertainties, and weakened demand conditions. They also pointed out that inflation remains elevated across many economies. Rising energy prices, along with increased agricultural costs driven by supply issues and adverse weather, contribute to inflationary pressures. The Monetary Policy Committee also identified tighter financial conditions and international supply chain disruptions as risks shaping the outlook.
The bank forecasts a rise in annual headline inflation during the third quarter of 2026, partly due to base effects. However, it anticipates that this increase will be smaller than previously projected in July, following lower inflation readings in June and July. The central bank expects inflation to gradually decline starting from the first quarter of 2027. Its target remains at 7%, with a tolerance band of two percentage points, for the second half of 2027. The upcoming policy meeting is scheduled for September 24.