Egypt central bank keeps rates on hold, as expected

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CAIRO: Egypt’s central bank left its benchmark overnight deposit and lending rates unchanged on Thursday, as expected by economists who say the government is more concerned about ending a recession than fighting inflation.

The decision came after the government reported urban consumer inflation in May that was below analyst expectations.

The central bank Monetary Policy Committee kept its key lending rate at 9.75 percent and the deposit rate at 8.25 percent after its regular meeting on Thursday, the bank said on its website.

All seven economists in a Reuters poll this week had forecast the committee would leave both the lending and deposit rates unchanged.

The Egypt economy fell into recession after an uprising that toppled president Hosni Mubarak in February, when some of its main sources of foreign exchange, including tourism and foreign investment, collapsed.

The economy has been contracting in first the six months of 2011 and the government said on Sunday it was likely to grow by only 3.2 percent in the 2011/12 financial year, which begins next month.

It said high global food prices, distribution bottlenecks in Egypt and a planned increase in the minimum wage would keep inflation at a "low double digit level" in 2011/12.

Urban consumer inflation in Egypt was 11.87 percent in the 12 months to May, below analysts’ expectations and lower than 12.1 percent in April, the state statistics agency said on its website on Thursday.

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By Reuters
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