CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank maintained its main interest rates on August 20, preserving borrowing costs for the fourth consecutive policy meeting. The overnight deposit rate remained at 19%, and the overnight lending rate stayed at 20%. Both the main operation rate and discount rate were held at 19.5%. These levels have been unchanged since the February rate cut by the Central Bank of Egypt.
The Monetary Policy Committee last adjusted rates on February 12, when it reduced the policy corridor by 100 basis points. This decreased the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates also lowered to 19.5%. Following that, rates were left unchanged in meetings held in April, May, and July, before the decision to keep them steady in August.
Inflation figures played a key role in the latest policy review. In July, annual urban headline inflation increased to 14.9% from 14.3% in June. Annual core inflation also rose from 14.3% to 14.7% 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 annually while monthly prices remain stable
Economic performance also influenced policy considerations. According to the central bank, real GDP expanded by 5% in the first quarter of 2026. The bank noted a moderation in economic activity during the second quarter and projects an average annual GDP growth rate of roughly 5% for the 2025-2026 fiscal year. It also highlighted that output remains below its potential in the near term.
Egypt’s foreign currency reserves continued their upward trend over the summer. Net international reserves stood at $56.29 billion at the end of July, up from $55.07 billion in June—an increase of about $1.22 billion in one month. Reserves also surpassed the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt indicated the July figure as provisional upon release of the data.
The monetary focus remains on curbing inflation
The global economic environment remains a significant factor in the central bank’s assessment of domestic conditions. Authorities pointed to slower economic activity worldwide, geopolitical uncertainties, and reduced demand. They also observed elevated inflation in many economies, with energy prices facing renewed upward pressure and agricultural costs rising due to supply issues and adverse weather. Tighter financial conditions and global supply disruptions were also identified as risks impacting the outlook.
The bank anticipates that headline inflation will increase during the third quarter of 2026, partly due to base effects. It expects this rise to be smaller than initially projected at its July meeting, following lower inflation in June and July. A gradual decline in inflation is forecasted to resume from the first quarter of 2027. The central bank’s target remains at 7%, with a tolerance band of two percentage points, for the second half of 2027. The next policy review is scheduled for September 24.