Egypt's central bank keeps key interest rates unchanged

The committee kept the overnight lending rate at 9.25% and the overnight deposit rate at 8.25% for a fifth consecutive time, after cutting rates in September and November

  
The headquarters of Egypt's Central Bank are seen in downtown Cairo, Egypt January 11, 2018.

The headquarters of Egypt's Central Bank are seen in downtown Cairo, Egypt January 11, 2018.

REUTERS/Mohamed Abd El Ghany

CAIRO - Egypt's central bank kept its key interest rates unchanged during its monetary policy committee (MPC) meeting on Thursday, the bank said in a statement.

The committee kept the overnight lending rate at 9.25% and the overnight deposit rate at 8.25% for a fifth consecutive time, after cutting rates in September and November.

Egypt has some of the highest real interest rates in the world, which has helped to attract investment in treasuries but discouraged corporate borrowing.

Eighteen analysts polled by Reuters forecast that the bank would keep rates unchanged as increased commodity prices and domestic inflation counteract any pressure for a reduction.  

The MPC noted that headline inflation had increased to 4.8% in May from 4.1% in April, after having a dipped from 4.5% in March. Inflation readings are expected to be affected by unfavorable base effects in the near term, it added.

The MPC said global economic activity was expected to continue recovering from the COVID-19 pandemic. Egypt's real GDP growth stood at 2.9% during the first quarter of 2021, preliminary figures show, up from 2.0% during the previous quarter, it noted.

"Real GDP growth is expected to remain on an accelerating trajectory, which is partially base effect driven from last year's shrunken base," the bank said.

The central bank twice lowered its benchmark rate by 50 bps in September and November last year, and cut it by 300 bps at the outbreak of the pandemic in March 2020. Rates are at their lowest since July 2014.

The MPC in December narrowed its inflation target to 5%-9% from the previous 6%-12%.

(Reporting by Mahmoud Mourad; editing by Barbara Lewis) ((mahmoud.mourad@thomsonreuters.com;))


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