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CAIRO (Capital Markets in Africa) – Egypt’s central bank left its key interest rates unchanged on Thursday at a meeting of its Monetary Policy Committee, the bank said in a statement, the third consecutive meeting where it kept rates on hold.
The bank kept its overnight deposit rate at 14.75 percent and its overnight lending rate at 15.75 percent.
The decision comes after Egypt’s core inflation rate soared in January to 30.86 percent, its highest in more than a decade, as the effects of its November currency float and IMF-endorsed austerity measures rippled through the economy.
The central bank quit pegging the Egyptian pound to the dollar in November in an effort to attract foreign capital. The pound consequently weakened from 8.8 pounds to the dollar to roughly 20 pounds in December. It was trading around 16 pounds to the dollar on Thursday.
The November float was part of government reforms aimed at clinching a three-year $12 billion loan agreement with the International Monetary Fund that included slashing subsidies.
The central bank jacked up interest rates by 300 points after the float in an effort to drain pounds from the market and stabilise the currency, but it has left them on hold ever since. Nine out of 13 economists polled by Reuters had forecast that it would again keep them unchanged this month.
Average yields on Egyptian six-month and one-year Treasury bills, meanwhile, rose at an auction on Thursday, ending a recent rally of declining yields supported by a rush of foreign investors buying Egyptian debt.