CAIRO, EGYPT / RankWire.AI / – Egypt’s central bank has kept its primary interest rates steady as of August 20, marking the fourth consecutive policy meeting with unchanged borrowing costs. The overnight deposit rate remains at 19%, while the overnight lending rate stays at 20%. Both the main operation rate and discount rate are fixed at 19.5%. The Central Bank of Egypt has held these levels since its rate reduction in February.
On February 12, the Monetary Policy Committee last adjusted rates, decreasing the policy corridor by 100 basis points. This move lowered the deposit rate to 19% and the lending rate to 20%, with the main operation and discount rates also reducing to 19.5%. Following this, policymakers maintained rates unchanged during meetings in April, May, and July before reaffirming the decision in August.
Inflation figures were a key factor in the latest monetary policy review. In July, annual urban headline inflation rose to 14.9% from 14.3% in June, while annual core inflation increased to 14.7% from 14.3% over the same period. Despite this, both headline and core consumer prices showed no monthly growth in July. The central bank attributed part of the annual increase to unfavorable base effects.
Yearly inflation climbs as monthly price gains halt
Economic performance also influenced policy decisions. The central bank’s data indicate that real gross domestic product expanded by 5% during the first quarter of 2026. It is estimated that economic activity slowed in the second quarter. The bank projects an average real GDP growth rate of around 5% for the 2025-2026 fiscal year, while also noting that output remains below its potential level in the short term.
Reserves in Egypt’s foreign currency holdings continued to grow through the summer months. As of the end of July, net international reserves reached $56.29 billion, up from $55.07 billion in June—an increase of approximately $1.22 billion in one month. These reserves are also higher than the $51.45 billion recorded at the end of December 2025. The Central Bank of Egypt reported the July figure as provisional when releasing the data.
The primary focus remains on controlling inflation
Global economic factors continue to play a significant role in the central bank’s assessment of the country’s monetary environment. Officials highlighted slower economic activity worldwide, geopolitical instability, and weaker demand conditions. They also pointed out that inflation remains elevated in many countries, with energy prices experiencing renewed upward pressure and agricultural prices rising due to supply issues and adverse weather. The Monetary Policy Committee identified tighter financial conditions and global supply chain disruptions as additional risks to the international outlook.
Looking ahead, the central bank anticipates that annual headline inflation will increase during the third quarter of 2026, partly due to base effects. However, it expects this rise to be smaller than previously forecasted at its July meeting, following lower inflation readings in June and July. A gradual decline in inflation is projected to resume starting from the first quarter of 2027. The bank’s inflation target remains at 7%, with a tolerance margin of two percentage points, aiming for achievement in the second half of 2027. The next policy review is scheduled for September 24.