Egypt Central Bank keeps key rate on hold

Egypt’s central bank kept interest rates unchanged as the economy struggles after more than a year of unrest and political tensions. The Monetary Policy Committee left the overnight deposit rate at 9.25 percent and the overnight lending rate at 10.25 percent, the central bank said Thursday on its website. All seven economists surveyed by Bloomberg anticipated the move.

Economic growth has been the weakest in decades after the uprising last year deterred tourists and investors. Annual inflation in urban areas, the gauge the central bank monitors, slowed to 8.3 percent in May from 8.8 percent in April. The bank has kept rates on hold since an increase in November that some economists saw as effort to avert a run on the Egyptian pound as the country’s foreign currency reserves plunged.

Thursday’s decision comes “given a sluggish recovery amidst uncertain domestic and global outlooks, as well as concerns about inflationary pressures,” Alia Moubayed, senior economist at Barclays Capital, said.

The central bank has spent more than half its reserves since the revolt, seeking to keep the currency stable. Economists such as Raza Agha of the Royal Bank of Scotland Group Plc says International Monetary Fund support is necessary to rebuild investor confidence.

Egypt requested a $3.2 billion loan from the IMF in January. Bickering between the interim government and the Islamist-dominated parliament has complicated the loan talks that were later put on hold during the presidential election.

A version of this article appeared in the print edition of The Daily Star on June 15, 2012, on page 5.




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