April 28, 2014 / 3:56 PM / in 4 years

UPDATE 2-Egypt's central bank keeps key rates unchanged

(Adds central bank statement)

CAIRO, April 28 (Reuters) - Egypt’s central bank kept official interest rates on hold as expected on Monday, as it tries to stimulate growth in an economy battered by three years of political turmoil, while keeping inflation under control.

Economic growth in the Arab world’s most populous country has been sluggish as tourists and foreign investors shied away since a popular uprising toppled autocrat Hosni Mubarak in 2011.

The bank said its monetary policy committee (MPC) left the overnight deposit rate at 8.25 percent and its overnight lending rate at 9.25 percent.

It also kept its discount rate and the rate it uses to price one-week repurchase and deposit operations at 8.75 percent.

Six economists polled by Reuters had said they expected the central bank to keep rates on hold in the meeting, which was initially scheduled for April 24 but delayed until Monday due to a public holiday.

“The pronounced downside risks to domestic GDP combined with the negative output gap since 2011 will limit upside risks to the inflation outlook,” the bank said in a statement on its website.

At its last meeting, on Feb. 27, it kept its deposit and lending rates at 8.25 and 9.25 percent, respectively.

Economic growth in Egypt has been slow despite pledges of more than $12 billion in aid from Saudi Arabia, the United Arab Emirates and Saudi Arabia after the army ousted Islamist President Mohamed Mursi last July.

Gross domestic product was only 1.2 percent in the first half of 2013/2014, the bank said, and the finance minister has cut his growth forecasts for the year to 2 to 2.5 percent from a previous estimate of 3 to 3.5 percent.

Egypt’s annual urban inflation rate was steady at 9.8 percent in March, unchanged from the month before. Core annual inflation quickened to 9.9 percent in March from 9.7 percent the month before. (Reporting by Shadia Nasralla and Asma Alsharif; Editing by Robin Pomeroy)

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