Egypt's central bank keeps interest rate unchanged

Rate remains at its two-year level after fears that tightening or loosening the cost of borrowing could prove risky for the troubled economy

Egypt's central bank will leave its key overnight deposit and lending rates unchanged, a step anticipated by analysts in the light of recent economic indications.
The bank's Monetary Policy Committee (MPC) decided the key lending rate would remain at 9.75 per cent and the deposit rate at 8.25 per cent during its monthly meeting on Thursday, an announcement on the central bank's website said.
Key interest rates have not been altered since September 2009.
Leading investment bank Beltone Financial earlier predicted the CBE's decision, saying that tightening or loosening the cost of borrowing at a time of economic instability might prove risky for the whole economy.
“Given that inflation is slowing down and a prospect of Egypt's speedy economic recovery is unlikely, on the back of the new developments in the global economy, we find no reason for the Central Bank of Egypt to tighten its monetary policy,” read a note issued by the investment bank earlier today.
The annual inflation rate fell well below estimated rates, with year-on-year urban inflation dropping from a hefty 11.8 per cent in June 2011 to 10.4 per cent in July 2011.
Growth of the Egyptian economy is predicted to remain weak for the remainder of 2011 as the political and economical situation remains volatile.
The central bank also left its interest rate for seven-day repurchase agreements unchanged at 9.75 per cent and its discount rate at 8.5 per cent.