CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank has kept its key interest rates unchanged on August 20, marking the fourth consecutive policy meeting where borrowing costs remained steady. The overnight deposit rate stayed at 19%, while the overnight lending rate held at 20%. Both the main operation rate and discount rate remained at 19.5%. These levels have been maintained since the bank’s February rate reduction.
The last rate adjustment by the Monetary Policy Committee occurred on February 12, when it reduced the policy corridor by 100 basis points. This cut lowered the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates also decreasing to 19.5%. Following that move, policymakers held rates steady at meetings in April, May, and July, before making the same decision in August.
Inflation data played a key role in the recent policy evaluation. The annual urban headline inflation rose to 14.9% in July from 14.3% in June. Core inflation also increased from 14.3% to 14.7% over the same period. Despite these annual increases, both headline and core consumer prices showed no monthly change in July. The central bank attributed part of the annual rise to adverse base effects.
Annual inflation climbs as monthly prices stabilize
Economic activity was another factor influencing policy decisions. According to the central bank, real gross domestic product grew by 5% in the first quarter of 2026. It also estimated that economic growth moderated in the second quarter and projected an average growth rate of about 5% for the 2025-2026 fiscal year. The bank further noted that output remains below its potential level in the near term.
During the summer, Egypt’s foreign currency reserves continued their upward trend, reaching $56.29 billion at the end of July compared to $55.07 billion in June. This increase of approximately $1.22 billion in one month also places reserves above the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt described the July figure as provisional when publishing the data.
Focus remains on reducing inflation through policy measures
The central bank’s assessment continues to consider the global environment, which officials say includes slower economic activity, geopolitical volatility, and weaker demand conditions. Elevated inflation persists in many economies, with energy prices facing renewed upward pressure and agricultural prices rising due to supply issues and adverse weather. The Monetary Policy Committee also identified tighter financial conditions and global supply disruptions as risks impacting the international outlook.
The bank projects that annual headline inflation will increase in the third quarter of 2026, partly due to base effects. However, it expects this rise to be less pronounced than the projections made at its July meeting, following lower inflation readings in June and July. A gradual decline in inflation is anticipated starting from the first quarter of 2027. The central bank’s target remains at 7%, with a tolerance band of two percentage points, during the second half of 2027. The upcoming policy meeting is scheduled for September 24.