Interest rates

Egypt’s central bank keeps rates unchanged

The headquarters of the Central Bank of Egypt is seen in downtown Cairo, Egypt June 7, 2017. REUTERS/Mohamed Abd El Ghany/File Photo

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CAIRO, Sept 22 (Reuters) – Contrary to analysts’ expectations, the Central Bank of Egypt (CBE) left overnight interest rates unchanged on Thursday, saying inflation was under control over the medium term.

The bank also raised the reserve rate to 18% from 14%, saying it would help tighten liquidity.

The bank’s Monetary Policy Committee (MPC) kept the deposit rate at 11.25% and its lending rate at 12.25%, it said in a statement.

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A poll of 15 analysts predicted the bank would raise rates by 100 basis points. Read more

The MPC said that although inflation was high, it was weaker month-on-month than it had been in March and April and was mainly driven by supply issues, in particular international commodity prices.

“Therefore, the MPC agrees that the current CBE policy rates coupled with the increase in the reserve requirement ratio are consistent with achieving price stability over the medium term,” it said in the accompanying statement. the rate decision.

Annual urban consumption inflation in Egypt accelerated to 14.6% year-on-year in August from 13.6% in July, while core inflation rose from 15.6% to 16 .7%.

The Federal Reserve raised US rates a day earlier by 75 basis points. The bank’s new governor, Hassan Abdalla, was appointed just hours before the last MPC meeting in August.

The central bank kept rates unchanged at its last two meetings, June 23 and August 18, but raised them by 200 basis points in May, saying it was seeking to contain inflation expectations after prices grew at their fastest pace in three years.

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Reporting by Alaa Swilam and Enas Alashray; Written by Alaa Swilam and Patrick Werr; Editing by Lisa Shumaker

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