CAIRO, EGYPT / RankWire.AI / – As of August 20, the Central Bank of Egypt opted to leave its key interest rates steady, marking the fourth consecutive meeting without adjustments. The Monetary Policy Committee upheld the overnight deposit rate at 19% and the overnight lending rate at 20%. Additionally, the main operation and discount rates remained at 19.5%. The CBE explained that this decision reflects their evaluation of the current inflation environment and economic outlook since their July meeting. These rates have persisted at these levels since February.
Official data indicate that in July, the annual urban inflation climbed to 14.9% from 14.3% in June. Over the same period, the CBE’s core inflation measure increased from 14.3% to 14.7%. In July, both headline and core inflation registered no change month-over-month. The Central Bank noted that unfavorable base effects contributed to the higher yearly inflation figures. The Central Agency for Public Mobilization and Statistics is responsible for compiling Egypt’s urban headline consumer price index.
This latest decision in August continues a trend of rate holds following 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. That move brought the overnight deposit and lending rates to their current levels of 19% and 20%, respectively, while the main operation and discount rates settled at 19.5%. Since that reduction, the Monetary Policy Committee has maintained the full rate structure unchanged at each subsequent meeting.
Inflation climbs yearly despite stable monthly prices
In its latest assessment, the central bank indicated that real economic activity continued to moderate during the second quarter, following a 5% real gross domestic product growth in the first quarter of 2026. The CBE projects an average real GDP growth rate of about 5% throughout the 2025-2026 fiscal year. It also anticipates that output will remain below its potential in the near term, with a gradual approach toward potential levels expected during the second half of 2027.
By the end of July, Egypt’s net international reserves stood at $56.29 billion, according to the central bank, up from $55.07 billion at the end of June, representing an increase of roughly $1.22 billion within the month. These reserves have also risen from $51.45 billion at the close of December 2025. The July figure was provisional at the time of the CBE’s August 5 release. Reserves serve as a key indicator of Egypt’s external financial strength alongside inflation and monetary policy metrics.
Inflation target and policy framework remain unchanged amid global economic conditions
The CBE highlighted that global economic activity experienced moderation amid geopolitical tensions and weakening demand. While inflation remains elevated across many economies, price pressures vary by country. The bank noted renewed upward and volatile movement in energy prices, driven by regional tensions, alongside increased agricultural costs due to supply concerns linked to geopolitical developments and adverse weather patterns. Prolonged regional conflicts, tighter financial conditions, and renewed global supply disruptions are among the risks identified by the bank as impacting the international economic outlook.
Looking ahead, the CBE forecasts that annual headline inflation will rise during the third quarter of 2026, partly due to base effects. The bank expects this increase to be less pronounced than its July projections, aided by lower inflation readings in June and July. A gradual decline in inflation is anticipated to restart from the first quarter of 2027. The central bank’s inflation target remains set at 7%, with a margin of plus or minus two percentage points, during the second half of 2027. The next scheduled meeting of the Monetary Policy Committee is set for September 24.