CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt kept its main interest rates steady on August 20, signaling a pause after three consecutive meetings. The Monetary Policy Committee held 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 was based on its evaluation of current inflation trends and the economic outlook since its July session. These rates have persisted at these levels since February.
Official data show that annual urban headline inflation increased to 14.9% in July from 14.3% in June. Core inflation, as calculated by the CBE, also rose to 14.7% from 14.3% over the same period. On a month-to-month basis, both headline and core inflation registered no change in July. The Central Bank of Egypt attributed the higher annual figures to unfavorable base effects. Egypt’s urban headline consumer price index is compiled by the Central Agency for Public Mobilization and Statistics.
This August decision marks the fourth consecutive hold following meetings in April, May, and July. The last change to policy rates was on February 12, when the CBE reduced key rates by 100 basis points. That adjustment brought the overnight deposit and lending rates to their current levels of 19% and 20%. The main operation and discount rates also decreased to 19.5%. Since that reduction, the Monetary Policy Committee has maintained the full rate structure without change at every meeting.
Inflation Rises Yearly While Monthly Prices Show No Change
The central bank noted that real economic activity continued to slow during the second quarter, based on its latest 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 fiscal year 2025-2026. It also anticipates that output will stay below its potential level in the short term. The bank expects this output gap to gradually narrow during the second half of 2027.
By the end of July, Egypt’s net international reserves had reached $56.29 billion, according to the central bank. This is an increase of roughly $1.22 billion from the end of June, when reserves stood at $55.07 billion. Reserves have also risen from $51.45 billion at the end of December 2025. The July figure was provisional when the CBE announced it on August 5. These reserve figures serve as another indicator of Egypt’s external financial health, alongside inflation and monetary policy metrics.
Central Bank Maintains Inflation Goals and Policy Approach
The CBE highlighted that global economic activity has slowed due to geopolitical tensions and weakened demand conditions. It added that inflation remains high in many economies, although the extent of price pressures varies across countries. Energy prices have faced renewed upward movement and increased volatility amid regional conflicts. Similarly, agricultural prices have increased due to supply concerns linked to geopolitical developments and adverse weather conditions. The bank listed ongoing regional tensions, tighter financial environments, and renewed global supply disruptions as risks to the international economic outlook.
Looking ahead, the CBE expects headline inflation to rise during the third quarter of 2026, partly driven by base effects. However, it noted that this increase should be milder than previously projected at its July meeting, following lower inflation readings in June and July. The bank expects inflation to gradually decline starting from the first quarter of 2027. Its target remains at 7%, with a margin of plus or minus two percentage points, during the second half of 2027. The next scheduled interest rate meeting for the Monetary Policy Committee is set for September 24.