CAIRO: Egypt’s central bank kept its key overnight interest rates steady on Thursday, its 10th pause since it stopped lowering rates in September 2009, the central bank said on its website.
It kept the overnight lending rate steady at 9.75 percent and the deposit rate at 8.25 percent, the website said. It also left the discount rate unchanged at 8.5 percent.
All 13 economists in a Reuters poll this week forecast that the bank’s Monetary Policy Committee would keep rates steady.
The bank slashed rates last year in a cycle of cuts aimed at spurring growth in the wake of the global economic crisis. It has held them steady since then and analysts do not expect it to begin raising them until some time next year.
“I think that rates will remain unchanged, as monetary means should be kept accommodating to growth,” said John Sfakianakis, chief economist at Banque Saudi Fransi.
“Also, a raise could generate some ‘hot money’ interest within the emerging markets pool which the authorities would not want to see at this stage.”
Egypt’s Finance Minister Youssef Boutros-Ghali forecast on Monday that the economy would grow by 7 percent in the fiscal year that begins in July 2011, up from 5.1 percent in the year ended June 30, 2010 and an expected 6 percent this year.
The government believes it needs a minimum 6 percent growth to absorb new entrants to the labor force. Still, continued high inflation could put pressure on the central bank to raise rates in 2011, analysts said.
Simon Williams, an economist at HSBC, said, “Core inflation went outside what most of us view as the central bank’s comfort range in November and will probably be there in December and January too.”
Core inflation, which strips out subsidized goods and volatile items including fruit and vegetables, rose in November to 8.58 percent from 7.65 percent in October.
Urban consumer price inflation slowed to 10.2 percent year-on-year in November from 11 percent in October.
