Kuwait follows Fed in second cut in discount rate this year
The Central Bank of Kuwait (CBK) decided Thursday, February 1, to cut its discount rate by half a point to 6.25 percent, the second cut in less than a month, in the wake of a similar US move, the official news agency KUNA reported.
"The decision aims at achieving harmony between the interest rates on the dinar and those on main world currencies, especially the US dollar," the bank's governor Sheikh Salem Abdul Aziz al-Sabah told KUNA.
The US Federal Reserve sliced a half point off its key rates on Wednesday, also the second time in a month, to boost the slumping US economy. CBK cut its discount rate, which fixes a ceiling for local lending rates, by a half percentage point on January 4, the day after the first US rate cut.
The governor noted that the reduction of interest rates on the dollar and other international currencies "has prompted the CBK to lower the interest rate on the dinar." Sheikh Salem has been criticized for maintaining a high interest rate on the national currency, but he stressed that was necessary to stop capital flight.
The oil-rich Gulf state's currency is linked to the greenback at a fixed exchange rate of $3.3 to the dinar. —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)