CAIRO, EGYPT / RankWire.AI / – The Central Bank of Egypt maintained its key policy rates on August 20, marking the fourth consecutive meeting without any adjustments. The Monetary Policy Committee decided to keep the overnight deposit rate at 19% and the overnight lending rate at 20%. Additionally, the main operation and discount rates were held steady at 19.5%. The CBE explained that this decision was based on its evaluation of prevailing inflation trends and the economic outlook since its July meeting. These rates have remained unchanged since February.
Official figures show that the annual urban inflation increased to 14.9% in July from 14.3% in June. Core inflation, as calculated by the CBE, also rose from 14.3% to 14.7% during this period. Both headline and core inflation registered no change month-on-month in July. The Central Bank of Egypt attributed the higher annual figures partly to unfavorable base effects. The urban consumer price index for Egypt is produced by the Central Agency for Public Mobilization and Statistics.
This August decision continues a pattern of holding rates after meetings in April, May, and July. The last policy adjustment occurred on February 12, when the CBE cut key rates by 100 basis points, bringing the overnight deposit and lending rates to 19% and 20%, respectively. The main operation and discount rates were also reduced to 19.5%. Since then, the Monetary Policy Committee has consistently maintained the same rate structure at every subsequent meeting.
Inflation climbs annually amid stable monthly prices
The bank noted that real economic activity showed signs of moderation during the second quarter, according to its latest assessments. This follows a 5% growth in real gross domestic product during the first quarter of 2026. The CBE forecasts an average annual real GDP growth rate of about 5% for the 2025-2026 fiscal year. It also anticipates that output will stay below its potential in the near future, with a gradual convergence towards potential levels expected in the latter half of 2027.
Egypt’s net international reserves stood at $56.29 billion at the end of July, up from $55.07 billion at the close of June, reflecting an increase of approximately $1.22 billion in July. Reserves have also grown from $51.45 billion at the end of December 2025. The reserve data, which was provisional when released on August 5, offers an additional indicator of Egypt’s external financial health alongside inflation and monetary policy measures.
Inflation target remains unchanged amid ongoing policy stance
The CBE highlighted that global economic activity has slowed amid geopolitical uncertainties and weakening demand. Despite this, inflation continues to stay elevated in many countries, although the pace of price increases varies. Energy prices have faced renewed upward pressure and increased volatility due to regional tensions, while agricultural costs have risen owing to supply disruptions linked to geopolitical developments and adverse weather conditions. The bank identified prolonged regional conflicts, tighter financial conditions, and renewed global supply chain disruptions as key risks influencing the international economic outlook.
The CBE anticipates that headline inflation will rise during the third quarter of 2026, mainly due to base effects. However, this increase is expected to be milder than projected in July, following lower inflation in June and July. The bank predicts a gradual decline in inflation starting from the first quarter of 2027. Its official inflation target remains 7%, with a tolerance of plus or minus two percentage points, set for the second half of 2027. The next scheduled meeting of the Monetary Policy Committee will take place on September 24.