By CentralBankNews.info
Jordan’s central bank raised all its monetary policy rates by 25 basis points, effective June 18, in response to rising global and regional interest rates.
The Central Bank of Jordan (CBJ) raised its benchmark rate, the one-week repurchase rate, to 3.75 percent and has now raised it by 100 basis points so far this year following a 25 point hike in March and a 50 point hike in February.
“This decision came in line with the bank’s policy framework which aims at maintaining the competitiveness of the Jordanian dinar on one hand, and providing adequate volume of loanable funds that meet the requirements of economic activity in the Kingdom, on the other hand,” the CBJ said in a statement dated June 15.
Jordan’s inflation rate rose to 3.7 percent in May from 3.5 percent in April while the dinar was trading around 0.709 to the U.S. dollar today, slightly down from 0.707 at the start of the year.
Jordan continues to face serious challenges, with conflicts in Syria and Iraq weighing on its economy.
But economic growth is expected to improve slightly this year, helped by a rebound in tourism, exports and remittances. The International Monetary Fund forecasts 2017 growth of 2.3 percent after an estimated 2.0 percent in 2016.
The IMF said in May that recent rate raises by the central bank have helped maintain confidence in the Jordanian dinar peg and adequate levels of international reserves while balancing the need to support credit conditions.
The IMF added the CBJ had confirmed its readiness to raise policy rates if pressures on its reserves were to emerge to keep the buffer at the current, comfortable level.
To ensure financing for vital sectors in the economy, especially small and medium enterprises, the central bank said the refinancing rate would remain at 1.75 percent for projects in the Amman region and at 1.0 percent for projects in other regions while keeping maturities of 10 years.
The central bank’s refinancing programs target industry, tourism, agriculture, renewable energy and information technology, with funds available of about 1.1 billion dinars. Total funding granted to date has reached 400 million dinars on 535 projects that have created 6,000 jobs, the CBJ said.
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