Egypt central bank keeps rates steady

Egypt’s central bank left its key overnight deposit and lending rates unchanged, a step expected by analysts in an economy locked in recession for the last six months. The bank’s Monetary Policy Committee (MPC) kept its key lending rate unchanged at 9.75 per cent and the deposit rate at 8.25 per cent after its regular meeting on Thursday, it said on its website. All eight economists polled by Reuters this week had predicted the MPC would not change the rates, which it has not altered since September 2009. Analysts say the central bank is reluctant to risk pushing up the cost of borrowing while the economy remains unsteady. Investors and tourists retreated from Egypt after the uprising that led President Hosni Mubrak to resign in February. Growth is projected to remain weak in the second half of the year. Urban consumer price inflation edged down to 11.8 per cent in the year to end-June from 11.87 per cent in May. Core inflation, which strips out subsidised goods and volatile items including fruit and vegetables, rose to an annual 8.94 per cent from 8.81 per cent in May. The central bank also left its interest rate for seven-day repurchase agreements unchanged at 9.75 per cent and its discount rate at 8.5 per cent. Egypt’s main index closes lower, its fourth day of declines on pessimism that a broad cabinet reshuffle put together this week will not be enough to satisfy demands for faster government reforms. Property shares lead the decline, with Palm Hills sliding 1.4 per cent, SODIC 1.1 per cent and Talaat Moustafa 0.7 per cent. Egypt’s new cabinet was sworn in on Thursday, with more than half of the ministers losing their jobs, including the foreign, finance and trade ministers. “Investors are concerned that the new cabinet will not be enough to please the activists who have been protesting in Tahrir Square,” says Nader Khedr, an investment and capital market analyst. Analysts say expectations over second-quarter earnings are yet to have any effect on the market, since the bulk of companies will not start reporting for another two weeks. An exception is Mobinil, which is scheduled to publish results on Tuesday. From / Gulf Today