Monday, January 20, 2014

Jordan cuts rate 25 bps to stimulate growth

    Jordan's central bank cut its benchmark rediscount rate by 25 basis points to 4.25 percent as "a catalyst to further economic growth stimulation through promoting private sector expansion."
    The Central Bank of Jordan (CBJ), which cut rates by 50 basis points in 2013 after raising them by the same amount in 2012, also said the cut took place amid a continuous improvement in the country's fundamental economic indicators, such as subdued inflationary pressures, higher appetite for dinar denominated assets, increase investment inflows and the resulting positive impact on foreign reserves.
    The CBJ announced the rate cut on Sunday with the new rates effective from today. The CBJ's overnight repurchase agreement rate will be 4.0 percent, the weekly repurchase agreement rate 3.50 percent and the overnight deposit window facility at 3.25 percent.
   Jordan's inflation rate fell to 3.4 percent in November from 5.8 percent the previous month while Jordan's Gross Domestic Product expanded by an annual 2.80 percent in the third quarter.
   Jordan's economy is under pressure from the cost of accommodating hundreds of thousands of Syrian refugees and in October the central bank said the drain on resources and higher state spending from the presence of over 600,000 refugees was cutting growth by at least 2 percentage points.


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