CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt maintained its main interest rates on August 20, marking the fourth consecutive pause in policy adjustments. The Monetary Policy Committee kept the overnight deposit rate at 19% and the overnight lending rate at 20%, while holding the main operation and discount rates 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 remained unchanged since February.
Official data show that the annual urban inflation increased to 14.9% in July from 14.3% in June. Meanwhile, core inflation, as calculated by the CBE, rose to 14.7% from 14.3% over the same period. Both headline and core inflation registered zero monthly change in July. The Central Bank attributes the higher annual figures to unfavorable base effects. Egypt’s urban consumer price index is compiled by the Central Agency for Public Mobilization and Statistics.
This marks the fourth consecutive rate hold after meetings in April, May, and July. The last policy rate adjustment occurred on February 12, when the CBE reduced key rates by 100 basis points, bringing the overnight deposit and lending rates to 19% and 20%, respectively. The main operation and discount rates also decreased to 19.5%. Since then, the Monetary Policy Committee has maintained these levels at each subsequent meeting.
Annual inflation rises despite stable monthly prices
The bank reports that real economic activity showed signs of moderation in the second quarter, following a 5% real GDP growth in the first quarter of 2026. The CBE forecasts an average annual real GDP growth of about 5% for the 2025-2026 fiscal year, with output expected to stay below its potential in the short term. It anticipates a gradual closing of this gap during the latter half of 2027.
Egypt’s net international reserves reached $56.29 billion at July’s end, up from $55.07 billion in June, an increase of approximately $1.22 billion during the month. Reserves have also grown from $51.45 billion at the end of December 2025. The July figure, released provisionally by the CBE on August 5, offers insight into Egypt’s external financial position alongside inflation and monetary policy indicators.
Inflation targets maintained amid global economic challenges
Global economic activity has slowed amid geopolitical instability and reduced demand, according to the central bank. Inflation remains elevated in many countries, though price pressures differ regionally. Energy costs have faced renewed upward momentum amid tensions, while agricultural prices increased due to supply concerns linked to geopolitical issues and adverse weather conditions. The bank identified prolonged regional tensions, tighter financial conditions, and renewed global supply disruptions as key risks to the international economic outlook.
Looking ahead, the CBE expects headline inflation to rise during the third quarter of 2026, partly due to base effects. However, it anticipates this increase will be less pronounced than previously projected in July, given lower inflation in June and July. The bank foresees a gradual decline in inflation starting from the first quarter of 2027. Its inflation target remains 7%, with a tolerance of plus or minus two percentage points, during the latter half of 2027. The next scheduled meeting of the Monetary Policy Committee will be on September 24.