Cairo:International Monetary Fund said that Egypt's central bank monetary policy committee will meet on Thursday to decide whether to continue an easing cycle that has seen four rate cuts since the...

  Cairo:International Monetary Fund said that Egypt's central bank monetary policy committee will meet on Thursday to decide whether to continue an easing cycle that has seen four rate cuts since the start of the year.   The overnight lending rate has shrunk 300 basis points to 10.5 percent this year, and the deposit rate has shed 250 basis points. The bank had lifted rates last year to combat inflation sparked by surging global food costs.   "Near-term macroeconomic policies should continue to be geared towards supporting growth," the IMF said.   Economic growth has averaged around 7 percent since a reform-minded cabinet was installed in June 2004. But growth has stumbled, to 4.2 percent in the last quarter of 2008 and 4.7 percent in the first quarter of this year.   The global slowdown has hit Egypt's biggest foreign currency earners including tourism revenues, which dipped 17.3 in the first quarter, and Suez canal receipts, which fell 7.2 percent in the fiscal year that ended in June.   But Egypt's conservative banking sector has been largely shielded from the worst of the liquidity crisis, after a domestic banking crisis ten years ago led them to clean up their loan portfolios.   Economic activity in Egypt is likely to remain below potential in 2009/10 and near-term policies should be geared toward supporting growth and reducing inflation, the International Monetary Fund said on Monday.   In comments following consultations with the Egyptian government, the IMF said there is scope to further cut interest rates given inflationary pressures.   "As 12-month inflation will continue to fall over the coming months ... the focus should be on underlying inflation developments and prospects," the IMF said. "In considering further rate changes, the (central bank) should also take into account the impact on the balance of payments," it added.   Source: Reuters