CAIRO, EGYPT / RankWire.AI / – In Cairo, on August 20, the Central Bank of Egypt announced that it would keep its key interest rates unchanged, marking the fourth consecutive meeting without a rate adjustment. The Monetary Policy Committee held the overnight deposit rate at 19%, the overnight lending rate at 20%, and kept the main operation and discount rates at 19.5%. The bank explained that this decision was based on its assessment of current inflation trends and the economic outlook since their July meeting. These rates have been steady since February.
Official data indicate 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 from 14.3% to 14.7% over the same period. Both headline and core inflation showed no monthly change in July. The Central Bank of Egypt stated that unfavorable base effects contributed to the higher annual figures. Egypt’s urban consumer price index is produced by the Central Agency for Public Mobilization and Statistics.
This August decision follows a pattern of maintaining rates after 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 cut brought the overnight deposit and lending rates to their current levels of 19% and 20%, respectively, with the main operation and discount rates falling to 19.5%. Since then, the Monetary Policy Committee has held the entire rate structure steady at each subsequent meeting.
Annual inflation accelerates while monthly prices stay stable
The bank reported that real economic activity continued to slow down during the second quarter, according to its latest estimates. This followed a 5% real gross domestic product growth in the first quarter of 2026. The CBE anticipates an average real GDP growth of about 5% for the 2025-2026 fiscal year and expects output to remain below potential in the near future. The bank projects that economic output should gradually approach its potential level during the second half of 2027.
As of the end of July, Egypt’s net international reserves reached $56.29 billion, an increase from $55.07 billion at the end of June, amounting to roughly $1.22 billion during the month. Reserves have also grown from $51.45 billion at the close of December 2025. The July figure was provisional when released by the CBE on August 5. These reserve figures serve as a current indicator of Egypt’s external financial health, alongside inflation and monetary policy metrics.
Central bank reaffirms inflation goal and monetary policy stance
The CBE highlighted that global economic activity has slowed amid geopolitical unrest and weakened demand. It also noted that inflation remains high in many economies, though price pressures differ across nations. Energy prices have faced renewed upward trends and heightened volatility amid regional tensions. Additionally, agricultural prices have increased due to supply concerns linked to geopolitical developments and adverse weather conditions. The bank listed ongoing regional tensions, tighter financial conditions, and renewed global supply disruptions among the risks influencing the international economic outlook.
Looking ahead, the CBE projects that headline inflation will rise during the third quarter of 2026, partly due to base effects. However, this increase is expected to be more moderate than the projections made at its July meeting, following lower inflation readings in June and July. The bank anticipates that inflation will gradually decline starting from the first quarter of 2027, with its target of 7%, plus or minus two percentage points, remaining in effect during the second half of 2027. The next scheduled meeting of the Monetary Policy Committee is set for September 24.