Egypt's central bank keeps rates unchanged, adjusts inflation target

FILE PHOTO: Central Bank of Egypt's headquarter is seen in downtown Cairo, Egypt September 18, 2018. REUTERS/Mohamed Abd El Ghany

CAIRO (Reuters) - The Central Bank of Egypt (CBE) kept its main interest rates steady on Thursday, citing rising inflation in recent months and slowing economic growth due to the coronavirus pandemic.

The bank held the overnight lending rate at 9.25% and the overnight deposit rate 8.25%, the lowest since July 2014.

All but two of the 16 analysts polled by Reuters had predicted the central bank would keep rates steady at its regular monetary policy committee meeting on Thursday.

Real GDP growth recorded a preliminary figure of 0.7 percent during the third quarter of 2020, up from -1.7% during the April-June quarter when Egypt implemented a nightly curfew and a host of other measures aimed at curbing the coronavirus, the CBE’s figures showed.

“Economic activity was affected by the impact of COVID-19 and its resulting containment measures. Meanwhile, most demand-side leading indicators for October and November 2020 show continued signs of recovery after displaying weakness during the [April-June quarter],” the bank said.

The monetary policy committee also adjusted its inflation target to 7% +/- 2 percentage points on average by the fourth quarter of 2022, from a target of 9% +/- 3 percentage points on average in the fourth quarter of 2020.

Reporting by Nadine Awadalla and Nafisa Eltahir; Editing by Alex Richardson and Nick Macfie