The Egyptian central bank Thursday kept its benchmark interest rate at the lowest level since November 2006 for the fourth consecutive meeting as core inflation remains subdued. The Monetary Policy Committee left the overnight deposit rate at 8.25 per cent and the overnight lending rate at 9.75 per cent, the Cairo-based bank said in a statement on its Web site Thursday. Eight economists surveyed by Bloomberg had predicted the decision, while one forecast a quarter-point increase. “With headline inflation decelerating and more importantly, core inflation expected to remain within the 6 to 8 percent range, we expect the Central Bank of Egypt to leave interest rates unchanged,” Mohamed Abu Basha, an economist at Cairo-based investment bank EFG-Hermes Holding SAE, wrote in a note today before the decision. Core inflation, which excludes the cost of fruit and vegetables as well as administered prices, eased to 6.9 per cent in February from 7.4 per cent the month before. The central bank said on Feb. 4 that inflation is within its “comfort zone,” without saying what that range is. The bank has said it won't announce an inflation target until it has more tools to manage price growth. The rate of headline urban inflation fell to 12.8 per cent in February from 13.6 per cent the month before. The economy of the most populous Arab country expanded 5.1 per cent in the last quarter of 2009, compared with 4.6 per cent in the previous three months. The government expects gross domestic product to expand more than 5 percent in the fiscal year through June, from 4.7 per cent the year earlier. The central bank reduced interest rates six times in 2009 to support economic growth, which fell below the average of 7 per cent achieved in the three fiscal years to June 2008 as the global financial crisis hurt revenue from tourism and damped foreign direct investment.
