Friday, July 27, 2012

Egypt keeps interest rate steady at 9.25%

    Egypt’s central bank kept its benchmark overnight deposit rate unchanged at 9.25 percent, as expected, but said it would not hesitate to adjust rates in light of the downside risks posed to the economy from the challenges facing the euro area.
    The bank said in a statement that headline inflation eased by 0.55 percent in June from the previous month for an annual rate of 7.26 percent, down from 8.3 percent in May, while the core inflation also eased to 7.04 percent, driven by lower food prices.
    It cautioned, however, that the re-emergence of local supply bottlenecks posed upside risks to the inflation outlook.

    Egypt's economy, which is slowly recovering after last year's political upheaval, expanded by 5.2 percent in the third quarter of the 2011/2012 fiscal year, but the bank said this was largely due to a favorable base effect from the same 2011/2010 quarter when economic activity ground to a halt.
     "Looking ahead, the current political transformation may continue to have ramifications on both consumption as well as investment decisions, adversely weighing on key sectors within the economy," the central bank said, adding"
    "Moreover, downside risks continue to surround the global recovery on the back of challenges facing the Euro Area. These factors, combined, pose downside risks to domestic GDP going forward."
    Eqypt's central bank also held its overnight lending rate steady at 10.25 percent, the 7-day repo rate at 9.75 percent and the discount rate at 9.5 percent.


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