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Egypt's central bank holds key rates steady as inflation picks up

The Central Bank of Egypt (SAE) maintained its key policy rates after an uptick in headline inflation during the last two months of 2019, winding down an easing cycle that has seen 350 basis points in rate cuts since August.

The bank's monetary policy committee kept the overnight deposit rate at 12.25%, the overnight lending rate at 13.25%, the rate of main operation at 12.75%, and the discount rate at 12.75%. The last rate cut was made in mid-November 2019, when the bank responded to the lowest inflation levels Egypt had seen in almost 14 years by lowering its key policy rates by 100 basis points.

Annual headline inflation came in at 7.1% in December 2019 and 3.6% in November, accelerating from a 14-year low of 3.1% in October, as base-year effects wore off, Egypt's central bank said.

Core inflation, meanwhile, dipped to an annual rate of 2.4% in December 2019 and 2.1% in November, slowing down slightly from 2.7% in October.

"The monetary policy committee decided that keeping key policy rates unchanged remains consistent with achieving the inflation target of 9%, plus or minus 3 percentage points, in the fourth quarter of 2020, and price stability over the medium term," according to the bank.