Jordan slashes basic interest rates by 25 basis points

Business Materials 3 February 2008 16:06 (UTC +04:00)

( dpa ) - The Central Bank of Jordan on Sunday cut the rediscount rate by 25 basis points, to 6.75 per cent, to cope with recent reductions in the dollar's value, a CBJ statement said.

The CBJ also slashed the rates of the repurchase agreements (REPO) to 6.50 per cent from 6.75 per cent.

"The reduction of interest rates on the Jordanian dinar came in response to global and domestic changes and out of the CBJ's keenness on the attractiveness of the country's investment environment," the statement said.

The Jordanian dinar has been pegged to the US dollar since 1995 but the CBJ has been keen to retain an interest rate differential between the greenback and the Jordanian currency to encourage citizens to keep their savings in the dinar, economists said.

The US Fed cut the interest rate on the dollar by 1.25 percentage points in the past 10 days, but the CBJ opted to trim the rediscount rate by only 0.25 percentage points because inflation was rising in Jordan, they added.