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Jordan central bank cuts interest rates by 0.25 per cent

Regional upheaval led to slowdown in growth rates that were cut to two per cent of GDP during Q1

The Central Bank of Jordan (CBJ) announced that it is cutting its benchmark lending rates by 25 per cent basic points, putting the key monetary policy instruments rates at 2.5 per cent, down from 2.75 per cent.

The bank also said it will trim its discount rate to 3.75 per cent instead of four per cent and its overnight repo rate to 3.5 per cent, down from 3.75 per cent, as of Thursday.

In a statement carried by the Jordan News Agency, the bank cited positive indicators for the move, namely falling inflation, which had dropped to –0.8 per cent over the first five months of the current year as a result of lower oil prices in the global market.

According to the bank, other indicators include a growth in expatriate remittances as well as a record build-up in foreign currency reserves, which stood at over $15 billion, enough to cover the Kingdom’s commodity and service imports for eight months.

This trend, it pointed out, partially reflects the dinar’s attractiveness as a saving pot and Jordan’s ability to attract more Arab and foreign capital, in addition to a steep fall in the budget deficit as well as the operational losses of the national electricity company.

The CBJ, said Jordan, like the rest of the regional countries, had been hit by the instability affecting global and regional economies, which prompted drawbacks in domestic economic indicators, notably national exports and tourism revenues.

The bank said regional upheaval led to a slowdown in growth rates that were cut to two per cent of GDP during the first quarter of the year, compared with 3.2 per cent in the same period the previous year.