Interest rates in Lebanon will not rise for the time being unless rates in the U.S. soars to 2.5 percent, a Central Bank source said.
“The U.S. Federal Reserve decision to raise interest rates by 25 basis points will not affect Lebanon at present. But Feds continued to increase these rates till it reaches 2.5 percent then this will affect Lebanon,” the source told The Daily Star.
Wednesday, the U.S. Federal Reserve raised interest rates for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank’s target.
The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1 percent marked one of the Fed’s most convincing steps yet in the effort to return monetary policy to a more normal footing.
The source said there is no need to raise the interest rates because the spreads in Lebanon are still higher than the U.S.
The average interest rates on dollar deposits in Lebanon are around 3.5 percent compared to 1 percent in the U.S.
But the Fed will raise the interest rates on the dollar gradually till 2018.
Copyright © 2021, The Daily Star. All rights reserved.