Central Bank of Kuwait Governor Basil Al Haron said that the Bank’s Board of Directors decided to raise the discount rate by a quarter of a percentage point from 2 percent to 2.25 percent starting on June 16, adding that it was decided to make an adjustment in varying proportions in the rates of intervention in the monetary market currently applied to all interest rate structure maturities, including repurchases (repo), bonds and “central” securities, the system of acceptance of term deposits, direct intervention tools, as well as debt instruments.
The central bank’s decision comes in light of its continued follow-up to local and global economic conditions and geopolitical developments and its impact on the rise in global inflation rates resulting from high energy prices, commodity prices, and disruptions in supply chains, a major source of imported inflation, which is reflected in the consumer price index in Kuwait, in light of the openness of the Kuwaiti economy to the outside world and its dependence on imports to meet a large part of its commodity needs.
The governor explained, in a statement, that the decisions of the CBK on reducing or raising interest rates are based on the follow-up of local and global economic data and information, in addition to the bank’s monetary policy considerations, which aims to direct the interest rate in order to enhance the environment supporting economic growth, particularly the GDP of the non-oil sectors, and take into account the relationship of the Kuwaiti economy to the outside world and the required follow-up of the movement of global interest rates in order to determine the appropriate level of interest rate in order to contribute to the promotion of growth in the external world. Private sector deposits in dinars, which are one of the main tributaries of financing sectors of the national economy.
The decision had been taken into account by various factors influencing the consumer price index to identify and assess the factors that constituted pressures on those prices. The Central Bank also takes into account domestic sources that affect inflation rates, including monetary factors that fuel aggregate domestic demand.
He stressed that the Central Bank will continue to follow the developments of the economic and monetary conditions and its developments at the local and global levels to move to use the various instruments available for monetary policy to ensure the consolidation of monetary stability and financial stability in Kuwait.