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Egypt's central bank keeps key rates unchanged in October

Egypt's central banks key interest rates unchanged for third consecutive month to contain inflation

Ahram Online, Friday 17 Oct 2014
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The Central Bank of Egypt's headquarters in downtown Cairo (Photo: Reuters)
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Egypt's central bank on Thursday decided to keep the overnight deposit rate, overnight lending rate and the rate of the bank's main operation for October unchanged at 9.25 percent, 10.25 percent and 9.75 percent respectively.

The central bank raised its key interest rates in July to contain inflation, which went up on the back of price increases on subsidised fuel and electricity.

The Monetary Policy Committee (MPC) said in a press release following its Thursday meeting that key rates are "appropriate to anchor inflation expectations" adding that they considered "the balance of risks surrounding the inflation and GDP outlooks."

Egypt's annual headline inflation rate fell to 11.1 percent in September from 11.4 percent the previous month despite energy subsidy cuts made in July.

Following the inauguration of President Abdel-Fattah El-Sisi in July, the government announced drastic fuel subsidy cuts amounting to up to 78 percent as part of its fiscal consolidation plans.

Several economists have told Ahram Online that they still expect prices to keep rising on the back of subsidy cuts despite slowing in September.

The central bank's statement also said that it is keeping an eye on the risks to domestic growth from challenges faced by European economic risks and emerging markets slowing growth risks.

Earlier this week, the IMF cut its global economic forecasts for the third time this year as the risk of recession in the Eurozone increases and China's expansion slows.

Egypt's growth reached 3.7 percent in the last quarter of fiscal year 2013/14.

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