CBK raises discount rate to 2.75%, 2nd hike in a month
By Majd Othman
KUWAIT: Central Bank of Kuwait Governor Basel Al-Haroon stated that the Central Bank has decided to raise the discount rate by a quarter percentage point from 2.50 percent to 2.75 percent as of August 11, 2022.
The Central Bank of Kuwait has raised the discount rate for the second time in less than a month, surpassing the interest rate of the US central bank (Federal Reserve) which is currently in the range of 2.25%-2.5%.
Al-Haroon stated that the Central Bank, in addition, is making an adjustment of varying rates to the money market intervention rates that are currently applied to all the terms of the interest rate structure, including repurchases (repo), Central Bank of Kuwait bonds and securitization, the system for accepting term deposits, direct intervention instruments, in addition to public debt instruments.
The governor noted that the decision came in light of recent developments in the local and global economic conditions and geopolitical developments, and the impact of it on global inflation rates and its reflection on the consumer price index locally. He added, “the decision comes due to the latest local banking and monetary data after the recent Central Bank of Kuwait decision on July 28, 2022.”
The governor pointed out that the central bank considered the nature of the Kuwaiti economy today that is open to global world. What is required today is a diligent follow-up of local and global economic and financial data and information, keeping pace with the developments in major global interest rates. This is in accordance with the gradual methodology in moving the discount rate with the aim of enhancing the environment that supports sustainable economic growth, especially the non-oil sectors, consolidating monetary and financial stability and maintaining the attractiveness of the national currency as a reliable source of domestic savings, he pointed out.
The Central Bank of Kuwait will continue its monitoring of economic and cash developments in the local and international markets in order to take any necessary additional measures to ensure maintaining monetary and financial stability in Kuwait, he added.
