CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt held its main interest rates steady on August 20, marking the fourth consecutive meeting without adjustments. The Monetary Policy Committee maintained 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 stated that this decision was based on its evaluation of current inflation trends and the economic outlook since the July meeting. Since February, these rates have stayed at these levels.
Official data shows that the annual urban inflation increased to 14.9% in July from 14.3% in June. The CBE’s calculation of core inflation also rose from 14.3% to 14.7% over the same period. In July, both headline and core inflation figures remained unchanged month-over-month. The Central Bank of Egypt indicated that unfavorable base effects contributed to the higher yearly figures. The urban consumer price index is compiled by the Central Agency for Public Mobilization and Statistics.
This most recent decision in August continues the trend of holding rates after meetings in April, May, and July. The last rate adjustment occurred on February 12, when the CBE lowered 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 that reduction, the Monetary Policy Committee has maintained the entire rate structure unchanged at every subsequent meeting.
Yearly inflation rises as monthly prices stay steady
The central bank highlighted that real economic activity continued to slow during the second quarter, according to its latest estimates. This slowdown followed 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. The bank also anticipates output to remain below its potential in the near term, with a gradual convergence toward full capacity expected during the second half of 2027.
Egypt’s net international reserves reached $56.29 billion at the end of July, up from $55.07 billion at the close of June, reflecting a roughly $1.22 billion increase during the month. Reserves have also risen from $51.45 billion at the end of December 2025. When the CBE announced the July figure on August 5, it was considered provisional. These reserve figures provide a key indicator of Egypt’s external financial position, alongside inflation rates and monetary policy actions.
Inflation target remains unchanged within the policy framework
The CBE noted that global economic activity has slowed amid geopolitical instability and weakening demand. Although inflation remains high in many nations, price pressures differ across countries. Rising energy prices have faced renewed upward pressure, accompanied by increased volatility driven by regional tensions. Additionally, agricultural prices climbed due to supply concerns linked to geopolitical developments and adverse weather conditions. The bank listed prolonged regional tensions, tighter financial conditions, and renewed global supply disruptions as risks to the international economic outlook.
Looking ahead, the CBE expects headline inflation to increase during the third quarter of 2026, partly due to base effects. Nevertheless, the bank anticipates this rise will be less severe than the projections made in July, following lower inflation readings in June and July. A gradual decline in inflation is expected to resume from the first quarter of 2027. The target remains at 7%, with a tolerance 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.