CAIRO, EGYPT / RankWire.AI / – On August 20, the Central Bank of Egypt maintained its key interest rates at current levels, marking a continuation of its policy pause for a fourth consecutive meeting. The Monetary Policy Committee kept the overnight deposit rate at 19% and the overnight lending rate at 20%, while the main operation and discount rates remained at 19.5%. The CBE explained that this decision was based on their evaluation of prevailing inflation conditions and the economic outlook since their July meeting. Since February, these rates have remained unchanged.
Official data shows that annual urban headline inflation increased to 14.9% in July from 14.3% in June. Over the same period, core inflation, as calculated by the CBE, rose from 14.3% to 14.7%. On a month-to-month basis, both headline and core inflation stayed flat in July. The Central Bank of Egypt attributed the higher annual figures to unfavorable base effects. The urban consumer price index for Egypt is compiled by the Central Agency for Public Mobilization and Statistics.
This August decision marks the fourth consecutive hold after meetings in April, May, and July. The last time the CBE adjusted its policy rates was on February 12, when a 100 basis point cut was implemented. That move reduced the overnight deposit and lending rates to their current levels of 19% and 20%, respectively, with the main operation and discount rates also falling to 19.5%. Since that reduction, the committee has consistently maintained the full rate structure without change at each meeting.
Inflation climbs yearly while monthly prices remain steady
The bank stated that real economic activity continued to slow down during the second quarter, according to its recent estimates. This follows a 5% growth in real gross domestic product during the first quarter of 2026. The CBE projects an average real GDP growth rate of about 5% for the 2025-2026 fiscal year and anticipates output will stay below its potential in the short term. The central bank expects that, during the latter half of 2027, output should gradually approach its potential level.
As of 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. This represents an increase of approximately $1.22 billion during July. Reserves have also grown from $51.45 billion at the close of December 2025. The July reserve figure was provisional at the time of the CBE’s August 5 release. These reserve figures offer an ongoing measure of Egypt’s external financial health alongside inflation and monetary policy indicators.
Bank affirms inflation target and policy stance amidst global economic shifts
The CBE noted that global economic activity has slowed amid geopolitical instability and weaker demand conditions. It highlighted that inflation remains high across many economies, although inflationary pressures differ between countries. Energy prices faced renewed upward movement and increased volatility due to regional tensions. Likewise, agricultural prices rose amid supply concerns linked to geopolitical developments and unfavorable weather conditions. The bank identified ongoing regional tensions, tighter financial conditions, and renewed global supply chain disruptions as key risks influencing the international economic outlook.
The CBE forecasts that headline inflation will increase during the third quarter of 2026, partly driven by base effects. However, it expects this rise to be less pronounced than projected in July, thanks to lower inflation readings in June and July. The bank anticipates inflation will begin a gradual decline from the first quarter of 2027 and aims to reach a target of 7%, with a margin of plus or minus two percentage points, during the second half of 2027. The next scheduled interest rate decision by the Monetary Policy Committee is set for September 24.