November 15, 2018 / 7:30 PM / 6 months ago

UPDATE 1-Egypt keeps interest rates on hold, says inflation contained

(Adds details from Monetary Policy Committee statement)

CAIRO, Nov 15 (Reuters) - Egypt’s central bank left its key overnight interest rates steady on Thursday, saying underlying inflationary pressures in the economy were contained.

Eleven of 13 economists polled by Reuters had expected rates to remain unchanged, while two predicted an increase. The bank kept the deposit rate at 16.75 percent and the lending rate at 17.75 percent.

Egypt’s annual urban price inflation rose more than expected in October, climbing to 17.7 percent from 16 percent in September. Core inflation, which strips out volatile items such as food, was at a more subdued 8.86 percent.

The bank’s Monetary Policy Committee said that headline inflation had been affected by a higher-than-expected increase in prices of fresh vegetables. This means that inflation risks exceeding its target of 10 to 16 percent for the fourth quarter of 2018, it said.

“Given the contained underlying inflationary pressures and the transitory nature of the supply shock related to select fresh vegetables, the MPC decided to keep key policy rates unchanged,” the statement said.

“Current policy rates remain in line with achieving single-digit inflation as soon as the effects of fiscal consolidation measures dissipate.”

GDP grew by 5.3 percent in the fiscal year that ended in June 2018, the highest rate in 10 years.

The bank also left its discount rate unchanged at 17.25 percent. (Reporting by Lena Masri; editing by Patrick Werr and John Stonestreet)

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