Egypt central bank cancels March 28 meeting after rate hike

DUBAI (Reuters) - Egypt's central bank on Wednesday cancelled a March 28 meeting of its Monetary Policy Committee (MPC), saying it had done enough at its special meeting held on March 6 when it hiked key interest rates by 600 basis points.

The interest rate rise was meant to accelerate the monetary tightening process and ensure a decline in underlying inflation, Egypt's central bank said on March 6.

The central bank set its overnight lending rate at 28.25% and its overnight deposit rate at 27.25% and said it would let the Egyptian pound trade freely. The central bank's next scheduled MPC meeting is set for May 23, its website showed.

Egypt's pound hit a record low against the dollar after the announcements, while Egyptian sovereign dollar bonds rallied.

It weakened below 50 Egyptian pounds to the dollar, far beyond previous records, from about 30.85 pounds, a level Egypt has for months tried to defend. The Egyptian currency closed at 46.95 to the dollar on Wednesday.

Egypt's central bank deputy governor said interest rates will fall again, as the tightening cycle is temporary.

The country's balance of payments should gradually improve, Rami Aboul Naga said after the MPC unscheduled meeting.

(Reporting by Nayera Abdallah; Editing by Gareth Jones and Alexander Smith)