CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt maintained its key interest rates at the same levels on August 20, marking a fourth consecutive pause in policy adjustments. The Monetary Policy Committee kept the overnight deposit rate at 19% and the overnight lending rate at 20%. Additionally, the main operation and discount rates were held steady at 19.5%. The bank stated that this decision reflected its evaluation of current inflation trends and the economic outlook since its July meeting. These rates have stayed constant since February.
Inflation in urban areas rose to 14.9% in July from 14.3% in June, based on official figures. The CBE’s core inflation, calculated internally, increased from 14.3% to 14.7% over the same period. When viewed monthly, both headline and core inflation registered no change in July. The Central Bank of Egypt explained that unfavorable base effects contributed to the higher annual figures. The Egypt’s urban consumer price index is produced by the Central Agency for Public Mobilization and Statistics.
The decision in August marked the fourth consecutive hold after meetings in April, May, and July. The last adjustment to policy rates occurred on February 12, when the CBE reduced key rates by 100 basis points. This cut brought the overnight deposit and lending rates to their current levels of 19% and 20%, respectively. The main operation and discount rates also decreased to 19.5%. Since that February move, the Monetary Policy Committee has kept the entire rate structure unchanged at each subsequent meeting.
Annual inflation climbs while monthly prices remain unchanged
According to the bank, real economic activity continued to slow down during the second quarter, based on recent estimates. This follows a 5% growth in real gross domestic product during the first quarter of 2026. The CBE forecasts real GDP to grow by approximately 5% throughout the 2025-2026 fiscal year. It also anticipates output remaining below its potential in the near term, with a gradual convergence expected during the latter half of 2027.
At the end of July, Egypt’s net international reserves reached $56.29 billion, up from $55.07 billion at the end of June, reflecting an increase of about $1.22 billion during the month. Reserves have also risen from $51.45 billion at the close of December 2025. The July figure was provisional when the CBE announced it on August 5. These reserve data serve as a current indicator of Egypt’s external financial position alongside inflation and monetary policy metrics.
Central bank reaffirms inflation target and policy stance
The CBE highlighted that global economic activity has slowed amid geopolitical tensions and weakening demand. It also noted that inflation remains high in many economies, although price pressures differ across nations. Energy prices faced renewed upward trends and increased volatility due to regional conflicts. Likewise, agricultural prices rose because of supply concerns linked to geopolitical developments and adverse weather conditions. Risks to the international economic outlook identified by the bank include extended regional tensions, tighter financial conditions, and renewed disruptions in global supply chains.
The CBE projects that headline inflation will increase during the third quarter of 2026, partly due to base effects. Nevertheless, it expects this rise to be milder than previously projected during its July meeting, following lower inflation readings in June and July. The bank anticipates inflation will gradually decline starting from the first quarter of 2027, with a target of 7%, plus or minus two percentage points, in the latter half of 2027. The next scheduled meeting of the Monetary Policy Committee is set for September 24.