The Central Bank of Egypt keeps interest rates unchanged

The Central Bank of Egypt keeps interest rates unchanged

CAIRO (Reuters) – The Central Bank of Egypt, defying analysts’ expectations, kept overnight interest rates unchanged on Thursday, saying it believed inflation was under control in the medium term.

The bank also raised the reserve ratio to 18% from 14%, saying that would help reduce liquidity.

The bank’s monetary policy committee said in a statement that it kept the deposit rate at 11.25% and the lending rate at 12.25%.

A poll of 15 analysts expected the bank to raise interest rates by 100 basis points.

The MPC said that while inflation was higher, it was lower month on month than in March and April and was primarily driven by supply-side issues, particularly international commodity prices.

β€œTherefore, the Monetary Policy Committee agrees that the current key interest rates of the Central Bank along with the increase in the required reserve ratio are in line with achieving price stability in the medium term,” the Monetary Policy Committee said in the statement accompanying the rate decision.

Annual consumer price inflation rates in cities in Egypt accelerated to 14.6% y/y in August from 13.6% in July, while core inflation rose to 16.7% from 15.6%.

The Federal Reserve had raised US prices the previous day by 75 basis points. The new governor of the bank, Hassan Abdullah, was appointed just hours before the last meeting of the Monetary Policy Committee in August.

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

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