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CAIRO, Dec 26 (Reuters) - Egypt's central bank kept benchmark interest rates steady for a second month running on Friday, saying that while upside risks to inflation had decreased, prices remained elevated.
The bank, which ended a nine-month cycle of interest rate rises in November, kept its rates at 11.5 percent for deposits and 13.5 percent for lending.
"While most of the upside risks to inflation have eased on the back of the improving outlook for international commodity prices in light of the projected slowdown in global economic activity and the consequent moderation in domestic economic growth, the current inflation rates remain elevated," the bank said in a statement.
Urban consumer prices, the inflation figure the bank says it most closely watches, dipped to 20.3 percent in the year to November from a peak of 23.6 percent in August as global food and commodity prices retreated.
The bank said expected falls in inflation in coming months would give them more room to manoeuver to encourage growth.
"As inflation is projected to decline significantly over the coming months, the scope to move towards a less restrictive monetary policy stance in the period ahead is increasing in order to prevent economic growth from falling below its potential," the statement said.
Price stability is the central bank's primary concern, while the government is eager to boost growth in the most populous Arab country. (Writing by Alastair Sharp; Editing by Lincoln Feast)