CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank has decided to keep its key interest rates steady as of August 20, marking the fourth consecutive policy meeting where borrowing costs have remained unchanged. Specifically, the overnight deposit rate held at 19%, with the overnight lending rate staying at 20%. Meanwhile, the main operation rate and discount rate both persisted at 19.5%. These levels have been maintained since the bank’s rate cut in February.
The last adjustment to the rates was on February 12, when the Monetary Policy Committee reduced the policy corridor by 100 basis points, leading to a decrease in the deposit rate to 19% and the lending rate to 20%, while bringing the main operation and discount rates down to 19.5%. After that, policymakers kept rates unchanged during meetings in April, May, July, and again in August, indicating a stance of stability amid evolving economic conditions.
Inflation figures remained at the core of the recent policy deliberations, with annual urban headline inflation climbing to 14.9% in July from 14.3% in June. Correspondingly, annual core inflation increased to 14.7% from 14.3% over the same period. Despite these increases, both headline and core consumer prices showed no monthly change in July. The central bank attributed part of the annual rise to adverse base effects, which often distort year-over-year comparisons.
Rising inflation amid stagnant monthly prices
Economic activity also influenced the monetary policy stance; the central bank’s data indicates that real gross domestic product expanded by 5% in the first quarter of 2026. The central bank has noted that economic momentum slowed during the second quarter but anticipates an average real GDP growth rate of approximately 5% for the 2025-2026 fiscal year, while also emphasizing that output remains below its potential in the short term.
Egypt’s foreign currency reserves continued their upward trend over the summer, reaching $56.29 billion at the end of July from $55.07 billion in June, marking an increase of about $1.22 billion within one month. These reserves also exceeded the $51.45 billion recorded at the close of December 2025, with the Central Bank of Egypt noting that the July figure is provisional upon initial release of the data.
Focus stays on reducing inflation levels
The central bank’s assessment also considers the broader international environment, which features slower global economic activity, geopolitical tensions, and subdued demand. Additionally, elevated inflation persists in many economies, with energy prices experiencing renewed upward pressure and agricultural prices climbing due to supply issues and adverse weather conditions. The Monetary Policy Committee has highlighted tighter financial conditions and global supply chain disruptions as key risks influencing the international outlook.
Looking ahead, the central bank forecasts that headline inflation will continue to rise during the third quarter of 2026, primarily due to base effects, although the projected increase is expected to be smaller than initially forecasted following the lower inflation figures in June and July. The institution expects inflation to gradually decline starting from the first quarter of 2027, with a target of 7% and a tolerance band of two percentage points during the second half of 2027. The next policy meeting is scheduled for September 24.