Egypt’s central bank seen keeping key rates unchanged

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Egypt’s central bank will likely keep its key interest rates unchanged at its meeting on Thursday, a Reuters poll showed on Tuesday, as inflation rose slightly for the first time in eight months.

Nine out of 11 economists polled by Reuters said the bank was expected to maintain the deposit and lending rates, currently at 16.75 and 17.75 percent.

To combat soaring inflation, the central bank raised the rates by seven percentage points after it floated the currency in November 2016. It has cut them by two points since March as inflation eased.

Inflation climbed after Egypt floated its currency to secure a $12 billion International Monetary Fund (IMF) loan, reaching a record high of about 33 percent in July following cuts in energy subsidies.

Core inflation, which strips out volatile items like food, increased marginally to 11.62 percent year-on-year in April from 11.59 percent in March, ending an eight-month streak of declining rates.

Annual urban consumer price inflation meanwhile decreased, but marginally, to 13.1 percent year-on-year in April from 13.3 percent in March, a smaller drop than in recent months.

“We expect rates to remain on hold given a slightly elevated inflation reading in April, and more importantly, given the sharp increase in global oil prices,” said EFG Hermes lead economist Mohamed Abu Basha.

Egypt’s economic growth has slowed since a 2011 uprising drove foreign investors and tourists away, but economic reforms tied to the three-year IMF agreement signed in 2016 have led to positive economic indicators.

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