UPDATE 1-Egypt cbank keeps interest rates steady

* Overnight rate for lending 9.75 pct, deposits 8.25 pct

* Inflation seen under control, while growth below target

(Adds analyst comment, central bank statement)

CAIRO, Nov 4 (BestGrowthStock) – Egypt’s central bank left its key
overnight interest rates on hold on Thursday, saying non-food
inflation was largely subdued and global economic growth was
uncertain.

The decision by the bank’s Monetary Policy Committee to
leave rates unchanged was expected by all 14 economists who
took part in a Reuters poll this week. [ID:nLDE6A31H0]

The committee met hours after a new asset-buying plan by
the U.S. Federal Reserve caused the Egyptian pound to post one
of its biggest increases against the dollar in nearly six
years.

Before the committee’s meeting, some analysts had said the
U.S. policy of quantitative easing would increase the already
wide differential between Egyptian and U.S. interest rates,
making the bank even less likely than before to increase
rates.

They said that with even Egyptian inflation seemingly under
control and growth below the government’s target of about 6
percent, the central bank had little incentive to raise rates.

“It would have remained unchanged either way because of the
relatively stable inflation and the weakening of global
growth,” said Mohamed Abu Basha of EFG-Hermes.

The Fed on Wednesday said it would spend $600 billion to
buy longer-term U.S. Treasury bonds through to the end of next
June as part of a renewed quantitative easing programme. Themove boosted the normally steady Egyptian pound by about 1
percent as investors globally headed into riskier assets.

Repeating a statement it made after its last meeting on
September 16, the Egyptian central bank said: “Looking ahead,
unfolding global economic developments have created uncertainty
about the nascent global recovery, which could potentially
weigh on domestic investment and external demand.”

It added that underlying inflation pressures from the
economic recovery appeared to be contained.

The central bank kept its overnight lending rate steady at
9.75 percent and the deposit rate at 8.25 percent, its ninth
pause since it stopped lowering rates in September 2009. It
also left the discount rate unchanged at 8.5 percent.

Although urban inflation has fallen from a peak of 23.6
percent in August 2008, it reignited late last year, climbing
to as high as 13.6 percent in January even as core inflation
remained relatively steady.

Urban consumer price inflation rose to 11 percent
year-on-year in September, its second month of increases. Core
inflation, which strips out subsidised goods and volatile items
including fruit and vegetables, fell in September to 7.6
percent from 8.2 percent in August.

Egypt last month revised down its gross domestic product
growth figure for the April-June quarter to 5.4 percent from a
previously stated 5.9 percent.
(Reporting by Patrick Werr, Editing by Chizu Nomiyama)

UPDATE 1-Egypt cbank keeps interest rates steady