Egypt's Central Bank holds key policy rate at 19 percent to anchor inflation expectations

The Central Bank of Egypt held its key policy rate at 19 percent at its August meeting, opting to keep monetary conditions unchanged as it seeks to anchor inflation expectations. The Monetary Policy Committee announced the decision on 20 August, its fourth consecutive hold.

The overnight lending rate was kept at 20%, and the rate of the main operation and the discount rate at 19.5%. The committee had also held rates at its meetings on 2 April, 21 May and 9 July.

TIGHT STANCE MAINTAINED

The MPC said it wanted to maintain sufficiently tight monetary conditions to anchor inflation expectations and support the ongoing disinflation path. Annual urban headline inflation quickened to 14.9% in July from 14.3% in June, which the committee attributed to unfavourable base effects, while monthly headline and core inflation were both 0.0%.

The 19 percent overnight deposit rate compares with a peak of 27.25 percent set in March 2024. The MPC said the decision aimed to maintain an adequately positive real interest rate.

The committee said it would continue to assess monetary conditions in light of incoming developments and would not hesitate to take the necessary measures to preserve price stability.

INFLATION OUTLOOK

The CBE expects inflation to accelerate temporarily in the third quarter of 2026 because of unfavourable base effects, before declining gradually from the first quarter of 2027 towards its 7% (±2 percentage points) target in the second half of 2027. The committee said the outlook remained subject to upside risks, particularly an escalation of regional tensions and a greater-than-expected impact from fiscal consolidation measures.

The MPC's next scheduled meeting is on 24 September. The full statement was published on the Central Bank of Egypt's website.