CAIRO, EGYPT / RankWire.AI / – The Central Bank of Egypt opted to keep its key lending rates unchanged on August 20, marking its fourth consecutive pause in monetary policy. The Monetary Policy Committee maintained 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 its evaluation of current inflation trends and the economic outlook since its July meeting. Since February, these rates have stayed at these levels.
Official figures show that the annual urban inflation rate increased to 14.9% in July from 14.3% in June. During the same period, core inflation, as calculated by the CBE, went up from 14.3% to 14.7%. On a monthly basis, both headline and core inflation remained unchanged in July. The Central Bank of Egypt attributed these 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 latest decision in August marks the fourth consecutive rate hold, following meetings in April, May, and July. The last adjustment occurred on February 12, when the CBE reduced key rates by 100 basis points, bringing 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 consistently maintained the entire rate structure without further changes.
Inflation climbs annually despite stable monthly prices
According to the central bank, economic activity has continued to slow during the second quarter, based on its latest estimates. This slowdown followed a 5% real gross domestic product growth in the first quarter of 2026. The CBE projects an average real GDP growth rate of about 5% for the 2025-2026 fiscal year. It also anticipates that output will remain below its potential in the near term, with a gradual convergence expected during the second half of 2027.
As of the end of July, Egypt’s net international reserves totaled $56.29 billion, up from $55.07 billion at the close of June, representing an increase of roughly $1.22 billion in just one month. 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 offer a current snapshot of Egypt’s external financial stability alongside inflation and monetary policy indicators.
Central bank reaffirms inflation target and policy stance
The CBE noted that global economic activity has slowed amid geopolitical uncertainties and subdued demand. It also observed that inflation remains high across many countries, although inflationary pressures differ between regions. Rising energy prices have experienced renewed upward momentum and increased volatility due to regional tensions. Additionally, agricultural prices have climbed because of supply concerns linked to geopolitical developments and adverse weather conditions. The bank listed ongoing regional tensions, tighter financial conditions, and renewed global supply chain disruptions as significant 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. The bank forecasted that the increase would be less pronounced than its July projections, following lower inflation figures in June and July. A gradual decline in inflation is anticipated to begin from the first quarter of 2027, with the target set at 7%, plus or minus two percentage points, during the second half of 2027. The next scheduled interest rate review by the Monetary Policy Committee is on September 24.