By Nadine Awadalla
CAIRO, Sept 28 (Reuters) - Egypt’s central bank left its main interest rates unchanged on Thursday at a meeting of its monetary policy committee, it said in a statement.
The bank has raised key interest rates by a total of 700 basis points since it floated the pound in November as part of a $12 billion International Monetary Fund loan programme aimed at boosting the economy.
Egypt should get a $2 billion IMF loan payment after a second review by the Fund at the year’s end.
It kept the overnight deposit rate at 18.75 percent and the overnight lending rate at 19.75 percent, in line with the views of 10 out of 12 economists polled by Reuters this week.
“The tightening cycle has come to an end, in our view, for now. We do not expect, however, a cut just yet in corridor interest rates,” said Reham El Desoki, senior economist at regional investment bank Arqaam Capital.
Inflation dipped in August from a multi-decade high hit in July after a hike in energy prices as the government sought to narrow its gaping budget gap.
Annual urban consumer price inflation dropped to 31.9 percent year-on-year in August from 33.0 percent in July.
Core inflation, which strips out volatile items like food, decreased to 34.86 percent from 35.26 percent, according to the central bank.
“Inflation in August was mainly driven by an upward adjustment of regulated prices due to higher electricity tariffs, as well as by the increase in prices of fresh vegetables,” the bank said.
The pound traded around 17.63 pounds to the dollar on Thursday. It has strengthened marginally in recent weeks after hovering around 18 pounds just after the currency was floated.
“Given the upcoming IMF review and Egypt’s planned Eurobond sale, the bank wouldn’t want to do something that would get perceived as unconventional by the IMF or the credit rating agencies,” said Allen Sandeep, head of research at Naeem Brokerage.
Egypt’s government approved a Eurobond programme worth around $7 billion to be issued during the 2017-2018 fiscal year that began in July, state news agency MENA reported on Wednesday citing Prime Minister Sherif Ismail.
“Real monetary conditions continued to tighten, a necessary requirement to achieve the CBE’s inflation target. This process was supported by the combination of previous policy rate increases and the recent stability of the Egyptian pound against trading-partner currencies,” the bank said. (Reporting by Nadine Awadalla; Editing by Matthew Mpoke Bigg)