Egypt's Central Bank keeps interest rate unchanged

Reuters, Friday 22 Jul 2011

Analysts explain that the central bank is reluctant to push the cost of borrowing upwards while the economy is unstable

Egypt's central bank left its key overnight deposit and lending rates unchanged on Thursday, a step expected by analysts in an economy locked in recession for the last six months.

The bank's Monetary Policy Committee (MPC) kept its key lending rate unchanged at 9.75 per cent and the deposit rate at 8.25 per cent after its regular meeting on Thursday, it said on its website.

All eight economists polled by Reuters this week had predicted the MPC would not change the rates, which it has not altered since September 2009.

Analysts say the central bank is reluctant to risk pushing up the cost of borrowing while the economy remains unsteady.

Investors and tourists retreated from Egypt after the uprising that led President Hosni Mubrak to resign in February. Growth is projected to remain weak in the second half of the year.

Urban consumer price inflation edged down to 11.8 per cent in the year to end-June from 11.87 per cent in May. Core inflation, which strips out subsidised goods and volatile items including fruit and vegetables, rose to an annual 8.94 per cent from 8.81 per cent in May.

The central bank also left its interest rate for seven-day repurchase agreements unchanged at 9.75 per cent and its discount rate at 8.5 per cent.  

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