(Bloomberg) — Egypt left interest rates unchanged for a third consecutive meeting, opting for caution with a fragile US-Iran ceasefire at risk of unraveling.

The central bank kept the benchmark deposit rate at 19% and the lending rate at 20%, the monetary policy committee said Thursday in a statement. All six economists in a Bloomberg survey predicted the decision. 

Egypt hit pause on an almost yearlong monetary-easing cycle when the US-Israeli war on Iran began in late February. Renewed strikes between the US and the Islamic Republic this week have cast doubts a definitive end to the conflict that’s roiled energy markets is anywhere close.

The Middle East’s most populous nation has mostly managed to avoid an inflationary surge from the war, which raised Egypt’s fuel-import bills and caused a slump in its currency that’s been partially reversed since an initial peace deal was agreed in mid-June. 

Annual consumer-price growth has slowed for the past three months, reaching 14.3% in June, according to data released Thursday. That was at least partly the result of favorable comparisons with year-earlier data — the so-called base effect. 

All the same, a “still unstable geopolitical environment” will likely keep the central bank “from rushing to cut rates,” Mohamed Abu Basha, head of macroeconomic analysis at investment bank EFG Hermes, said in a note before the decision.

“The drop in oil prices and appreciation of the Egyptian pound clearly dent inflationary risks,” he said. “However, the recent renewal of geopolitical tensions and partial reversal of these positive trends are likely to keep the Central Bank of Egypt maintaining its more cautious approach towards interest rates.”

Since securing a $57 billion global bailout in early 2024 and devaluing the pound, Egypt’s domestic debt had been a favorite with overseas investors because it had some of the world’s highest inflation-adjusted interest rates. 

The US-Israeli war on Iran spurred the exit of billions of dollars from that market, resulting in the pound weakening to about 54 per dollar. The local currency has been gradually recovering, only to trim gains as the US and Iran traded new attacks.

Enacting a flexible exchange rate has been a key condition of Egypt’s expanded International Monetary Fund deal. The IMF last month announced a preliminary accord on its latest program review, putting Cairo on track to unlock more than $1.6 billion in financing. 

—With assistance from Sherif Tarek and Abdel Latif Wahba.