CAIRO: The Egyptian central bank kept its key overnight interest rates unchanged on Thursday, saying inflation remained within its comfort zone and economic activity was improving. The decision, in line with forecasts, marked the third pause since the bank began a series of rate cuts 12 months ago. All nine economists polled by Reuters had expected the bank to keep rates stable. The overnight lending rate was left at 9.75 percent and the deposit rate stayed at 8.25 percent, the central bank said on its website. The discount rate was also steady at 8.5 percent. Annual core inflation inched up to 6.85 percent in December compared to 6.59 percent in November on the back of the unfavorable base effects from last year and remains within our comfort zone, the bank said in a statement accompanying its decision. Core inflation strips out subsidized goods and volatile items. The urban consumer price index fell 1.3 percent month on month in December, though year-on-year inflation in December was steady from November at 13.2 percent. Gross domestic product rose at an annual 4.7 percent in the July-October quarter, the latest figures available showed. I think there is a chance of another cut this year should growth stay below 5 percent and core inflation fall below 5 percent. But our base case is for unchanged rates in 2010, said Simon Kitchen, an economist with EFG-Hermes. The next policy meeting of the central bank s Monetary Policy Committee is scheduled for March 18.
