CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank maintained its key interest rates on August 20, leaving borrowing costs unchanged for a fourth consecutive policy meeting. The overnight deposit rate persisted at 19%, and the overnight lending rate remained at 20%. The main operation rate and discount rate both stayed at 19.5%. These levels have been held since the bank’s February rate cut.
The Monetary Policy Committee last adjusted rates on February 12, when it reduced the policy corridor by 100 basis points, bringing the deposit rate to 19% and the lending rate to 20%, while lowering the main operation and discount rates to 19.5%. Following this, policymakers kept rates steady at meetings in April, May, and July, before reaffirming that decision in August.
Inflation figures played a key role in the latest policy review. Urban annual headline inflation rose to 14.9% in July from 14.3% in June, while core inflation increased 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 partly attributed the annual increase to unfavorable base effects.
Inflation climbs as monthly prices stabilize
Economic performance also influenced the decision. According to the central bank’s data, real gross domestic product expanded by 5% in the first quarter of 2026. The bank projected a moderation in economic activity during the second quarter and anticipates an average real GDP growth of around 5% for the 2025-2026 fiscal year. It also noted that output remains below its potential in the near term.
Egypt’s foreign currency reserves continued their upward trend over the summer months, with net international reserves reaching $56.29 billion at the end of July, up from $55.07 billion in June—an increase of approximately $1.22 billion in just one month. Reserves also exceeded the $51.45 billion level recorded at the end of December 2025. The Central Bank of Egypt reported the July reserve figure as provisional at the time of data release.
Inflation reduction remains the main policy focus
International conditions continue to be a significant part of the central bank’s economic assessment. Officials pointed to slower global economic activity, geopolitical tensions, and weaker demand globally. The bank also highlighted widespread inflation in many economies, noting renewed upward pressure on energy prices and rising agricultural costs amid supply issues and adverse weather. Additionally, tighter financial conditions and global supply chain disruptions are among the risks to the international outlook identified by the Monetary Policy Committee.
Looking ahead, the central bank expects headline inflation to increase during the third quarter of 2026, partly due to base effects. It stated that this rise should be less pronounced than previously projected at its July meeting, following lower inflation readings in June and July. The bank foresees inflation gradually declining from the first quarter of 2027, with a target of 7% and a tolerance band of two percentage points in the second half of that year. The upcoming policy meeting is scheduled for September 24.