June 25, 2020 / 5:16 PM / 2 months ago

UPDATE 1-Egypt's central bank keeps benchmark rates on hold

(Adds Monetary Policy Committee statement, background)

CAIRO, June 25 (Reuters) - The Central Bank of Egypt (CBE) kept its main interest rates steady on Thursday, saying inflation had fallen and economic growth was expected to recover partially as a coronavirus lockdown is gradually eased.

All but one of the 17 analysts polled had predicted the bank would leave rates unchanged at its regular Monetary Policy Committee (MPC) meeting on Thursday. The one dissenting analyst forecast a 100 bps cut.

Economic growth slipped to an annual 5.0% in the Jan-March quarter from 5.6% in Oct-Dec, hit by the coronavirus and the resulting containment measures, the MPC said in a statement.

The unemployment rate rose to 9.2% in April from 7.7% in the first quarter of 2020.

The government says growth will be much lower in the second quarter after large sections of the economy, including the crucial tourism industry, closed down.

“Nevertheless, the recently announced gradual easing of lockdown measures is expected to support the recovery of economic activity,” the MPC statement said.

Egypt announced on Tuesday that it would lift a night-time curfew from June 27 that has been in force since March 25 and would partially reopen restaurants, cafes and places of worship.

The national carrier EgyptAir said on Thursday it would resume flights to 24 international destinations from the first week of July.

Headline urban inflation slipped to 4.7% in May from 5.9% percent in April and core inflation to 1.5%, its lowest rate on record, from 2.5 percent in April

The bank kept the overnight lending rate at 10.25% and the overnight deposit rate at 9.25%, the lowest rates since early 2016, before Egypt embarked on a three-year, IMF-backed economic reform programme. (Reporting by Nadine Awadalla and Patrick Werr; Editing by Kevin Liffey)

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