UPDATE 1-Egypt's annual urban consumer price inflation falls to 3.1% in October

(Adds background and analyst quote)

CAIRO, Nov 9 (Reuters) - Egypt’s annual urban consumer price inflation fell to 3.1% in October, from 4.8% in September, the country’s official statistics agency CAPMAS said on Saturday, opening the way for further interest rate cuts by the central bank.

Egypt is approaching the end of an IMF-backed economic reform programme after its annual inflation rate rose to 33% in 2017. The country hiked domestic fuel prices in July under the terms of the agreement.

The IMF reforms have helped the government bring the budget deficit under control, precluding the need to expand the money supply. This in turn has reduced inflationary pressures.

In August and September the Central Bank of Egypt (CBE) made two consecutive cuts to Egypt’s overnight lending and deposit rates by a cumulative 250 basis points. Deposits now return 13.25% and lending 14.25%.

Analysts expect the CBE to make further rate cuts before the end of 2019 as inflation decelerates, a Reuters poll showed.

Radwa El-Swaify, head of research at Cairo-based Pharos Securities Brokerage, said urban inflation “is slightly lower than our expectations of 3.5% YoY, setting the stage for 100 bps cut in rates on Nov. 14”.

Reporting by Nadine Awadalla Writing by Amina Ismail Editing by Alexander Smith and James Drummond