Egypt’s central bank cut its key overnight deposit interest rate by half a percentage point, the third reduction this year, as inflation in the Arab world’s most populous country eased to its slowest pace in 15 months.
The deposit rate was lowered to 9.5 percent, while the overnight lending rate was reduced 1 point to 11 percent, the Cairo-based bank said in a faxed statement today.
The bank cut rates in February for the first time since April 2006 as inflation and economic expansion eased in the face of the global financial crisis. The government expects growth to range between 4 percent to 4.5 percent in the fiscal year through June, compared with 7.2 percent in the previous 12 months.
“The bank will continue to take the necessary measures to contain the adverse effects of the global economic turmoil on the domestic economy, provided that they do not conflict with the price stability objective,” the bank’s Monetary Policy Committee said in the statement.
Urban inflation, the rate which the central bank targets, eased to 11.7 percent in April from 12.1 in March.
Egypt’s deputy central bank Governor, Hisham Ramez, said in March that the central bank expects “single digit” inflation by June.