The central bank of Egypt (CBE) kept key interest rates on hold on Thursday, citing higher-than-expected headline inflation rates in September and October. The bank’s monetary policy committee left the overnight deposit and lending rates at 16.75% and 17.75%, respectively, and also left on hold its main operation and discount rates at 17.25%, the CBE said in a statement (pdf). Economists in our inaugural Enterprise poll had suggested that the MPC would leave rates on hold to preserve Egypt’s competitiveness in the battle for hot money fleeing emerging markets amid turmoil, a strong USD and rising US interest rates.

“Slight deviation” from inflation target: Annual headline inflation rose to 17.5% in October, up from 16% the previous month. “As headline inflation for October 2018 has been affected by a higher-than-forecasted increase in the prices of fresh vegetables, there is an upside risk of a slight deviation from the inflation target announced in May 2017, which records 13 percent (±3 percent) on average during 2018 Q4,” the CBE said.

The CBE said annual real GDP growth was unchanged at 5.4% in 2Q2018, stalling after six consecutive quarters on an uptrend. “The positive contribution of private domestic demand and net exports declined, while that of public domestic demand increased,” the bank said.