CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank maintained its key interest rates at current levels on August 20, marking the fourth consecutive policy meeting without adjustments. The overnight deposit rate stayed at 19%, while the overnight lending rate also remained at 20%. Both the main operation rate and discount rate held steady at 19.5%. These levels have been in place since the February rate reduction.
The last rate modification by the Monetary Policy Committee occurred on February 12, when it reduced the policy corridor by 100 basis points, lowering the deposit rate to 19% and the lending rate to 20%. Simultaneously, the main operation and discount rates were adjusted to 19.5%. Following that, rates remained unchanged during meetings in April, May, and July before the decision to hold them steady again in August.
Inflation data was a key factor in the latest policy review. Yearly urban headline inflation rose to 14.9% in July from 14.3% in June. At the same time, annual core inflation increased to 14.7% from 14.3%. Despite the annual increases, both headline and core consumer prices did not record any monthly growth in July. The central bank attributed part of the annual increase to adverse base effects.
Rising annual inflation occurs as monthly price gains remain stagnant
Economic activity was also a significant element in the policy considerations. The central bank’s figures indicate that real gross domestic product expanded by 5% during the first quarter of 2026. The bank suggested that economic momentum slowed during the second quarter and forecasts an average real GDP growth of approximately 5% for the 2025-2026 fiscal year. It also noted that output levels are still below their potential in the near term.
Egypt’s foreign currency reserves continued their upward trajectory through the summer months. Net international reserves reached $56.29 billion at the end of July, an increase from $55.07 billion in June, representing a rise of roughly $1.22 billion in one month. Reserves also exceeded the $51.45 billion recorded at the close of December 2025. The Central Bank of Egypt designated the July figure as provisional upon releasing the data.
The policy focus remains on reducing inflation
The central bank’s assessment continues to factor in the global environment. Policymakers mentioned slower economic activity worldwide, geopolitical uncertainties, and weakening demand conditions. They also highlighted high inflation levels across many economies. Renewed upward pressure on energy prices, alongside rising agricultural costs driven by supply issues and adverse weather, was noted. Additionally, tighter financial conditions and disruptions in global supply chains are among the risks influencing the international outlook identified by the committee.
Looking ahead, the central bank anticipates annual headline inflation will increase during the third quarter of 2026, primarily due to base effects. It also projected that this rise will be smaller than initially expected in July, following lower inflation figures in June and July. A gradual decline in inflation is expected to begin from the first quarter of 2027. The bank’s target remains at 7%, with a tolerance band of two percentage points, for the latter half of 2027. The upcoming policy meeting is scheduled for September 24.