(Adds MPC statement in paragraphs 6-7, detail in paragraph 3)
CAIRO Dec 29 Egypt's central bank kept its key
interest rates unchanged on Thursday, holding fire on further
action until the impact on inflation of last month's steep hike
in borrowing costs becomes clearer.
The Monetary Policy Committee kept the overnight deposit
rate at 14.75 percent and the overnight lending rate at 15.75
percent, the bank said in a statement, as predicted by seven out
11 economists polled by Reuters this week.
The bank had already raised rates by a cumulative 550 basis
points this year.
In early November, the central bank ditched its foreign
exchange peg of 8.8 pounds per dollar and, to help stabilise the
newly floated currency, raised interest rates by 300 basis
points. The pound has since weakened to around 19 per dollar
Annual headline inflation surged to an eight-year high of
19.4 percent in November, and many economists expect prices to
keep rising next year, driven by economic reforms, including
subsidy cuts and tax increases.
"Consumer prices during November were strongly impacted by
the economic reform measures related to the foreign exchange
rate market liberalisation as well as the hydrocarbon subsidies
adjustment," the MPC said in a statement.
"Looking ahead, annual inflation is expected to narrow after
being impacted by transitory cost-push factors stemming from the
economic reform measures ... At this juncture and given the
balance of risks, the MPC judges that the key CBE rates are
Egypt had been struggling with a foreign currency shortage
since an uprising in 2011 drove away tourists and foreign
investors, both major sources of hard currency.
In November, it sealed a $12 billion, three-year loan from
the International Monetary Fund to support its economic reform
(Reporting by Ahmed Aboulenein; Editing by Larry King)