(Adds central bank comment)
CAIRO May 29 Egypt's central bank left key
interest rates unchanged on Thursday, a day after Egyptians
voted to elect former army chief Abdel Fattah al-Sisi as
president, as it tries to balance growth and inflation
The central bank kept the overnight deposit rate and the
overnight lending rate at 8.25 percent and 9.25 percent,
respectively, it said in a statement on Thursday.
Growth has been sluggish for three years in the Arab world's
most populous country as tourists and foreign investors have
stayed away in the wake of the popular uprising that ousted
autocrat Hosni Mubarak in 2011 and the political turmoil that
Three of the six economists Reuters spoke to had expected
the bank to cut its benchmark rates by either 25 or 50 basis
points to give economic activity a boost.
The other three forecast no change in rates. As well as high
inflation, a tumbling Egyptian pound has pressured the central
bank to keep interest rates high to lure funds out of foreign
"The downside risks to domestic GDP combined with the
negative output gap since 2011 will limit upside risks to the
inflation outlook," the central bank said in a statement on its
"Given the mixed balance of risks surrounding the inflation
and the GDP outlooks at this juncture, MPC (the Monetary Policy
Committee) judges that the current key CBE rates are
appropriate," it added.
The central bank kept its deposit and lending rates
unchanged at its last meeting as well, on April 28.
Economic growth has been sluggish this year, with gross
domestic product only rising 1.2 percent in the first half of
2013/14. The government has cut its growth forecasts for this
year to 2-2.5 percent from a previous 3-3.5 percent.
The annual consumer inflation rate slowed to 8.9 percent in
April from 9.8 percent in March, while annual core inflation
slowed to 9.11 percent in April from 9.9 percent in March.
To support the local currency, the central bank has also
been burning through its foreign currency reserves, now at
around $17 billion compared with around $35 billion before the
(Reporting by Asma Alsharif; Editing by Hugh Lawson)