CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt maintained its key interest rates without change on August 20, marking the continuation of its policy pause for the fourth consecutive meeting. The Monetary Policy Committee kept the overnight deposit rate at 19% and the overnight lending rate at 20%, while the main operation and discount rates remained at 19.5%. The bank explained that this decision reflected its ongoing assessment of current inflation levels and the economic outlook since the July meeting. Since February, the rates have stayed at these levels.
Official data show that the annual urban headline inflation increased to 14.9% in July from 14.3% in June. Over the same period, core inflation, as calculated by the CBE, also rose to 14.7% from 14.3%. Both headline and core inflation registered no change on a monthly basis in July. The Central Bank of Egypt attributed the higher annual figures to unfavorable base effects. Egypt’s urban headline consumer price index is produced by the Central Agency for Public Mobilization and Statistics.
This August decision marked the fourth consecutive hold after meetings held in April, May, and July. The last change in policy rates occurred on February 12, when the CBE 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 every subsequent meeting.
Annual inflation climbs while monthly prices stay steady
The bank noted that real economic activity continued to moderate during the second quarter, based on recent estimates. This slowdown followed a 5% growth in real gross domestic product during the first quarter of 2026. The CBE projects an average real GDP growth rate of around 5% for the fiscal year 2025-2026, with output expected to remain below its potential in the near term. It also forecast that, during the second half of 2027, output should gradually move toward its potential level.
Egypt’s net international reserves stood at $56.29 billion at the end of July, up from $55.07 billion at the close of June, reflecting a monthly increase of approximately $1.22 billion. Reserves have also grown from $51.45 billion at the end of December 2025. The July figure was provisional when released by the CBE on August 5. These reserve figures, along with inflation and monetary policy indicators, offer a current snapshot of Egypt’s external financial standing.
Central bank reaffirms inflation target and policy stance
The CBE highlighted that global economic activity has slowed amid geopolitical uncertainties and subdued demand. Inflation remains high across many countries, though price pressures differ. Energy prices faced renewed upward momentum and increased volatility due to regional tensions, while agricultural prices rose amid supply concerns linked to geopolitical developments and adverse weather conditions. The bank listed ongoing regional tensions, tighter financial conditions, and renewed global supply disruptions among key risks impacting the international economic outlook.
The CBE anticipates that headline inflation will increase during the third quarter of 2026, partly driven by base effects. It expects this rise to be less pronounced than initially projected at its July meeting, following lower inflation readings in June and July. The bank expects a gradual decline in inflation beginning in the first quarter of 2027, with its target remaining at 7%, plus or minus two percentage points, during the second half of that year. The next scheduled meeting of the Monetary Policy Committee is set for September 24.