Egypt's central bank left its key interest rates unchanged for the second time and reiterated its view that keeping rates steady is consistent with achieving its inflation target of 9 percent, plus/minus 3 percentage points in the fourth quarter of this year.

The Central Bank of Egypt (CBE) left its overnight deposit rate at 9.25 percent, the overnight lending rates at 10.25 percent, and the rate on its main operation and discount rate at 9.75 percent.

CBE's monetary policy committee added its decision to maintain rates reflected the 300 basis point rate cut at an unscheduled policy meeting on March 16.

At its previous monetary policy meeting on April 2 CBE also maintained rates, saying this was consistent with achieving its inflation target.

Since February 2018, when CBE began easing its policy as inflationary pressures began to subside, key interest rates have been cut by 9.50 percentage points.

Egypt's inflation rate rose to 5.9 percent from 5.1 percent in March, with CBE saying this was due to unfavorable base effect from muted prices increases last year and higher prices in April 2020 due to the outbreak of COVID-19 and Ramadan.
The pickup in inflation led analysts to expect CBE to keep rates steady today.

Egypt's tourism sector has been hit hard by the spread of the coronavirus and CBE said leading indicators reflected a slowdown in March and April following a broad improvement in January and February.

"Nevertheless, the diversity of the economy provides some cushion given the resilience of some sectors," CBE said.

On Monday the International Monetary Fund's (IMF) executive board approved assistance of US$2.77 billion so Egypt can meet its urgent balance of payment needs from the pandemic.

"The pandemic and global shock pose an immediate and severe economic disruption that could negatively impact Egypt's hard-won macroeconomic stability if not addressed," IMF said.