Sunday, March 25, 2018

Jordan raises all monetary policy rates 25 bps

       Jordan's central bank raised all its monetary policy interest rates by 25 basis points, effective Sunday, March 25, to "strengthen the pillars of monetary and financial stability, limit foreseen inflationary pressures, and maintain a competitive return on financial instruments denominated in Jordanian dinars."
       The rate hike by the Central Bank of Jordan (CBJ) follows the U.S. Federal Reserve's 25-basis-point rate increase on March 21, and is in line with the CBJ's policy since March 2017, when it has been shadowing the Fed's rate hikes.
       The Jordanian dinar has had a fixed exchange rate to the U.S. dollar since 1995 and is the nominal pillar of its monetary policy.
        "The decision adjusts the structure of local interest rates to be more consistent with the recent trends and developments in the global and regional rates," CBJ said.
       The CBJ's main policy rate, the one-week repo rate, is now 4.25 percent, the rediscount rate 5.25 percent, the rate of repurchase agreements 5.0 percent and the overnight deposit rate 3.25 percent.
        But while the central bank raised its policy rates, it retained the rate on lending programs that target small and medium enterprises in the vital sectors of industry, tourism, agriculture, renewable energy, engineering consultants and information technology to "promote economic growth creation, particularly for youth.
        The central bank's rate on projects in the capital of Amman was maintained at 1.75 percent and rates on projects in other was unchanged at 1.0 percent.
       Jordan's inflation rate rose to 3.7 percent in February from 3.0 percent in January.


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