Jordan's Central Bank Reduces Interest Rates by 25 Basis Points

SadaNews Economy - The Central Bank of Jordan, in its sixth meeting of this year, has decided to lower the main interest rates and other monetary policy instrument rates by 25 basis points, effective next Sunday.

This decision comes based on the committee's assessment of the economic, monetary, and financial developments, and its monitoring of interest rate trends regionally and globally, with the inflation rate reaching 1.86% during the first eight months of this year, and expectations of it stabilizing around 2.2% for the entire year, contributing to maintaining purchasing power and enhancing the competitiveness of the national economy.

According to a statement from the Central Bank of Jordan, the economic indicators confirm the strength of monetary stability in Jordan, supported by a high level of foreign reserves at the central bank, which reached about $22.8 billion by the end of last August, covering the Kingdom's imports of goods and services for 8.7 months.

Similarly, the banking sector indicators continued to show strong performance, with total customer deposits at banks increasing by 5.7% year-on-year, reaching 48.3 billion dinars by the end of July. Additionally, credit facilities provided by banks recorded a growth of 2.8% on a year-on-year basis, amounting to about 35.6 billion dinars.

Financial stability indicators showed the strength of the capital adequacy of the Jordanian banking sector, as preliminary data for the first half of this year indicated that the capital adequacy ratio, which measures banks' ability to cover risks and meet their financial obligations, reached 18%, which is among the high ratios in the region, while the liquidity ratio was 142.4%, exceeding the required ratio set by the central bank of 100%.

The external sector continued to show high resilience, with tourism income rising by 7.5% during the first eight months of the year to reach $5.3 billion compared to the same period last year, while remittances from workers abroad increased by 1.5% during the first seven months of this year, totaling $2.1 billion.

In the same context, total exports recorded an 8.3% growth in the first half of this year, amounting to $6.8 billion.

The Central Bank of Jordan reaffirms its ongoing commitment to monitor economic, monetary, and financial developments at both local and international levels, taking all necessary measures to maintain monetary and financial stability in the Kingdom, ensuring moderate and stable inflation levels that serve the objectives of sustainable economic growth in Jordan.

This step followed the Federal Reserve's (the U.S. central bank) decision to cut interest rates by 25 basis points, given that the Kingdom's currency is pegged to the dollar.