Urban consumer inflation in Egypt was steady at 10.7 per cent in the 12 months to July, the state-run Capmas statistics agency said on Tuesday, giving the central bank more latitude to keep key interest rates on hold.

Urban consumer inflation - Egypt's most closely watched indicator of prices - was also at 10.7 per cent in June. The urban consumer price index was 151.2 versus 136.6 a year ago, the agency said on its website.

Inflation has broadly been on a downtrend since peaking at 23.6 percent in August 2008. This year it has fallen since hitting 13.6 per cent in January.

Some analysts have said a declining inflation rate indicates the central bank will keep interest rates steady in 2010.

The central bank said last month it was keeping its key overnight interest rates on hold for a seventh time, a day after the government announced the economic growth had accelerated to an annual 5.9 per cent.

The next meeting of the central bank's monetary policy committee is September 16.

The government said that gross domestic product had risen to an annual 5.9 percent in the April-June quarter, bringing growth in the fiscal year to end-June to 5.3 per cent, up from 4.7 per cent in 2008/09.

Economic Development Minister Osman Mohamed Osman forecast that growth would likely accelerate to 6.5 per cent in 2010/11 as the economy rebounded from the global downturn.-Reuters