Egypt central bank leaves key interest rates unchanged

Thursday 29-12-2016 07:41 PM

Central Bank of Egypt (CBE) - Archive

By Reuters

CAIRO, Dec 29 (Reuters) - Egypt's central bank kept its key interest rates unchanged on Thursday, holding fire on further action until the impact on inflation of last month's steep hike in borrowing costs becomes clearer.

The Monetary Policy Committee kept the overnight deposit rate at 14.75 percent and the overnight lending rate at 15.75 percent, the bank said in a statement, as predicted by seven out 11 economists polled by Reuters this week.

In early November, the central bank ditched its foreign exchange peg of 8.8 pounds per dollar and, to help stabilise the newly floated currency, raised interest rates by 300 basis points. The pound has since weakened to around 19 per dollar .

Annual headline inflation surged to an eight-year high of 19.4 percent in November, and many economists expect prices to keep rising next year, driven by economic reforms, including subsidy cuts and tax increases.

Egypt had been struggling with a foreign currency shortage since an uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency.

In November, it sealed a $12 billion, three-year loan from the International Monetary Fund to support its economic reform programme. (Reporting by Ahmed Aboulenein; Editing by Larry King)

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