CAIRO: The Central Bank of Egypt (CBE) left its key overnight interest rates on hold on Thursday a day after the government announced that economic growth had accelerated to an annual 5.9 percent.
The decision by the bank’s Monetary Policy Committee (MPC) to keep rates unchanged, its seventh pause since it last lowered rates in September, was in line with analyst forecasts.
The MPC repeated its view that despite high inflation, inflation pressure remained subdued.
Annual urban consumer inflation, at 10.7 in June, "continues to be elevated, reflecting the impact of last year’s unfavorable shock related to foods and vegetables," it said in a statement accompanying the rate decision. Food prices usually rise during the Islamic holy month of Ramadan.
"In the meantime, annual core CPI remains within the CBE’s comfort zone, almost unchanged at 6.70 percent in June," the statement said.
The central bank’s comfort zone for core inflation, though never announced, is believed to be between 6 and 8 percent, analysts say.
The MPC’s statement was little changed from one it made at its last meeting on June 17.
All 10 economists participating in a Reuters poll this week had forecast the MPC would keep rates steady.
The overnight lending rate was left at 9.75 percent and the deposit rate at 8.25 percent, the central bank said. The discount rate was also kept steady at 8.5 percent.
Urban inflation, the most closely watched price indicator, crept up from 10.5 percent for the year to May, yet still remains near its lowest level since August.
The government said yesterday that gross domestic product had risen to an annual 5.9 percent in the Apr-June quarter, bringing growth in fiscal year to end-June to 5.3 percent, up from 4.7 percent in 2008/09.
Minister for Economic Development Osman Mohamed Osman forecast on Thursday that growth would likely accelerate to 6.5 percent in for 2010/11 as the economy rebounded from the global downturn.
The central bank committee meets next on Sept. 16.
