ShareKUWAIT: The Central Bank of Kuwait (CBK) on Wednesday raised the discount rate by 0.25 percent from 4.0 percent to 4.25 percent effective July 27, 2023. The decision is part of the CBK’s efforts to maintain monetary and financial stability, enhance the economic growth of the various economic sectors, particularly the non-oil sectors, contain local inflationary pressures and maintain the competitiveness and attractiveness of the national currency as a lucrative store of domestic savings, Governor and Chairman of the CBK Board of Directors Basel Al-Haroon, said in a press statement. It is also based on the bank’s continuous monitoring of the economic, monetary and banking developments, he added.
This decision is informed by a thorough analysis of the latest economic, monetary, and banking data and information, including growth and inflation levels that trended upwards in June after stabilizing in the previous period, indicators of local liquidity, developments in deposits and bank credit, interest rates on both the Kuwaiti dinar and on main foreign currencies, thus supporting the attractiveness of the Kuwaiti dinar, he noted. The governor concluded that CBK shall continue its monitoring of the local and international economic, monetary, and banking developments, and direct the various monetary policy tools to provide an environment conducive to sustainable economic growth.
Meanwhile, other central banks in the GCC also have increased their key interest rates after the US Federal Reserve (Fed) delivered its 11th rate hike, reinforcing its fight against high inflation. GCC central banks normally change their interest rates in tune with the Fed as Gulf countries’ currencies barring Kuwait, – the UAE dirham, Qatari riyal, Saudi riyal, Omani rial and Bahraini dinar – are pegged to the dollar. The Central Bank of the UAE raised the base rate on its overnight deposit facility by 25 basis points (bps) to 5.40 per cent, from 5.15 per cent, effective Thursday.
“This decision was taken following the Fed’s announcement on July, 26th to increase the interest on reserve balances (IORB) by 25 bps,” the UAE central bank said in a statement. The UAE central bank maintained the rate applicable to borrowing short-term liquidity from the central through all standing credit facilities at 50 basis points above the base rate.
Saudi Central Bank (SAMA) raised the rate of repurchase agreement (repo) by 25 bps to 6 per cent and the rate of reverse repurchase agreement (reverse repo) by 25 bps to 5.50 percent while the Central Bank of Bahrain hiked the one-week deposit rate to 6.25 per cent and the overnight deposit rate to 6 percent. Similarly, Qatar Central Bank’s Monetary Policy Committee increased the deposit interest rate by 25 bps to 5.75 per cent, the lending interest rate to 6.25 percent and the repo rate to 6 percent. – KUNA and agencies
