CAIRO, EGYPT / RankWire.AI / – Central Bank of Egypt elected to keep its primary interest rates steady on August 20, marking the fourth consecutive meeting with no change in monetary policy. The Monetary Policy Committee maintained the overnight deposit rate at 19% and the overnight lending rate at 20%, while also holding the main operation and discount rates at 19.5%. The CBE explained that this decision was based on its evaluation of current inflation trends and the economic outlook since the previous July gathering. Notably, these rates have persisted at these levels since February.
Official data shows that annual urban headline inflation climbed to 14.9% in July, up from 14.3% in June. The CBE’s calculation of core inflation also increased, reaching 14.7% from 14.3% over the same period. On a monthly basis, both headline and core inflation figures recorded no change in July. The Central Bank attributed the higher annual figures to unfavorable base effects. The urban consumer price index for Egypt is compiled by the Central Agency for Public Mobilization and Statistics.
This August decision represents the fourth consecutive hold following meetings in April, May, and July. The last adjustment to policy rates occurred on February 12, when the CBE reduced key rates by 100 basis points. This move brought the overnight deposit and lending rates to their current levels of 19% and 20%, respectively. The main operation and discount rates also decreased to 19.5%. Since that February reduction, the Monetary Policy Committee has maintained the full rate structure unchanged at each subsequent meeting.
Annual inflation continues to rise while monthly prices stay stable
The CBE stated that real economic activity showed signs of moderation during the second quarter, based on its latest estimates, following a 5% growth in the first quarter of 2026. The bank projects real GDP growth to average approximately 5% throughout the 2025-2026 fiscal year. It also expects output to stay below its potential in the near term, with a gradual convergence toward potential levels anticipated during the latter half of 2027.
At the end of July, Egypt’s net international reserves stood at $56.29 billion, an increase from $55.07 billion at the close of June, representing about $1.22 billion added during the month. Reserves have also grown from $51.45 billion at the end of December 2025. The July reserve figure was provisional when the CBE announced it on August 5. These reserve data serve as another indicator of Egypt’s external financial health, alongside inflation and monetary policy measures.
Central bank affirms inflation target and monetary policy stance amid global uncertainties
The CBE noted that worldwide economic activity has slowed amid geopolitical tensions and weaker demand. Despite inflation remaining elevated in many economies, the degree of price pressures varies from country to country. The bank highlighted that energy prices have faced renewed upward pressure and increased volatility due to regional tensions. Additionally, agricultural prices have risen owing to supply concerns linked to geopolitical developments and adverse weather conditions. Among the risks to the global economic outlook listed by the bank are prolonged regional conflicts, tighter financial conditions, and renewed disruptions in global supply chains.
Looking ahead, the CBE anticipates that headline inflation will rise during the third quarter of 2026, partly due to base effects. However, the bank expects this increase to be less pronounced than initially projected in July, following lower inflation figures in June and July. The central bank forecasts that inflation will start to decline gradually from the first quarter of 2027 and aims to hit its target of 7%, with a margin 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.