The central bank’s Monetary Policy Committee left interest rates on Thursday. The overnight deposit rate was held steady at 18.75% while the overnight lending rate was kept the same at 19.75%. Annual urban headline inflation rate increased to 33% in July on account of numerous subsidy cuts and a slight uptick in the value-added tax to 14%, something the CBE had anticipated, the central bank said in a statement (pdf) on Thursday. GDP grew to 4.9% in 4Q2016-17, demonstrating that the economy is on a more sustained growth path, the bank said.

The CBE believes that inflation is on track to meet its target of 13% by 4Q2018, but said more fiscal reforms could have an impact on inflation that would require the CBE to take an ‘adaptive approach’ to monetary policy. Economists had predicted that the CBE would leave interest rates on hold.

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