AMMAN, (Reuters) - The Central Bank of Jordan (CBJ) on Sunday, May 13, cut its benchmark discount rate to 5.50 percent from 5.75 percent, bank officials said. Repurchase rates on certificates of deposit (CD), a key interest rate indicator, were also cut to 6.50 percent from 6.75 percent, an over two percentage point drop in nearly a year.
The CBJ's overnight window rates offered to banks with surplus funds also dropped by the same 25 points to 4.75 percent. The latest cuts further consolidate the downward interest rate trend and are mainly inspired by similar cuts in the U.S. Federal Reserve rates.
"This move reflects the responsiveness of the monetary policy to changes in interest rates on key currencies," Umayya Toukan, the CBJ Governor said in a statement.
Jordan's monetary authorities, emboldened by a steady build-up in foreign reserves now at a record $3 billion, have gradually cut high interest rates over the last two years.
Average yields on three-month certificates of deposit (CD) have fallen over four percentage points in nearly two years. They now stand at 4.94 percent.
The latest cuts will put more pressure on the country's 21 private banks to cut lending rates, essential to spur growth. The government has been urging the central bank to push commercial banks to reduce lending rates and thereby accelerate economic growth. ($1= 0.709 dinars)
© 2001 Mena Report (www.menareport.com)