Egypt rate decision too close to call

Egypt's central bank faces a tough choice when it meets on Thursday: clamp down on inflation or support an economy lurching towards recession, a dilemma that makes its rate decision too close to call.

More than two years of political and economic turmoil since the overthrow of President Hosni Mubarak has hammered foreign investment and led to budget and currency crises, which have helped drive urban inflation above 8 percent.

Some economists expect the acceleration in price prices will prompt the central bank to raise interest rates this week, changing monetary policy for the first time in more than a year.

"Two months ago inflation was around 4.7 percent and then in February it jumped Banks have already increased the rates on deposits over the past month and a half," EFG-Hermes economist Mohamed Abu Basha said.

He expects the bank to increase official rates by 50 basis points at its meeting on Thursday, which will be Hisham Ramez's first since taking over as governor in January.

The Egyptian pound has lost more than 8 percent of its value against the dollar since late last year, pushing up the cost of imported goods, and inflation in towns and cities jumped to 8.2 percent in the year to February from 6.3 percent in January.