(Bloomberg) -- Egypt held interest rates for the second straight month after inflation quickened more than expected and as the virus outbreak in China stoked concerns over global economic growth.

The central bank left the deposit rate at 12.25% and the lending rate at 13.25%, the Monetary Policy Committee said in a statement Thursday. Seven of 16 economists surveyed by Bloomberg had predicted a cut.

“While the expansion of global economic activity stabilized, financial conditions and uncertainty regarding trade policies eased somewhat,” the bank said. “However, disruptions to global economic activity following the recent coronavirus outbreak could weigh on the global economic outlook, at least in the near term.”

The decision came as Egyptian policy makers balance calls for more economic stimulus to boost business with the need to maintain the kind of sky-high rates that have made the North African nation’s debt a favorite of emerging-market investors.

Inflation that accelerated for a third consecutive month in January to an annual 7.2% may have also left the central bank in little hurry to restart an easing cycle that involved 450 basis points of rate cuts in 2019.

All the same, rate cuts are surely on the way soon. As Egypt pursues an economic overhaul that began in late 2016 with a dramatic currency devaluation to secure a $12 billion International Monetary Fund loan, it’s now looking to spur local enterprise and long-term foreign investment. Non-oil private sector growth slowed last month to its lowest level in almost three years.

Overseas money has continued to pour into local debt this year, as Egypt’s real rate remains among the highest globally and the pound has continued last year’s winning streak in being of the world’s top-three currency performers in 2020. Foreign holdings in Treasury bills and bonds climbed more than 13% in January, to reach $24.9 billion, according to the Finance Ministry.

To contact the reporter on this story: Mirette Magdy in Cairo at mmagdy1@bloomberg.net

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Michael Gunn, Srinivasan Sivabalan

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