KUWAIT: As part of vigilant monitoring of economic, monetary, and banking developments and forecast trends, the Central Bank of Kuwait (CBK) decided on Monday to maintain the current Discount Rate at 1.5 percent. Based on its periodic review of movements in interest rate trends on main currencies, the US Dollar being foremost, the CBK maintained the current interest rate cap for loans extended to customers in Kuwaiti Dinar, according to a press release. In addition, CBK cut rates of other monetary policy instruments, by 0.125 percent for the entire interest rate yield curve terms matrix, up to the ten-year term.
This includes repurchases (REPO), CBK Bonds, the Term-Deposits system, direct intervention instruments, as well as Public Debt instruments, effective October 28, 2020. This came amid continued decrease in interest rates on federal funds of the US Federal Reserve inching closer to zero-levels, which widened the margin tipping the scale on the side of the interest on the Kuwaiti Dinar as opposed to interest on the US greenback, thus bolstering the attractiveness of the Kuwaiti currency.
The decisions also came as part of the CBK’s special measures to cope with the ramifications of the Covid-19 pandemic on economic and banking conditions, most importantly employing facilitatory monetary policies regarding interest rates through cutting the Discount Rate to historical lows to reach 1.5 percent.
CBK Governor Dr Mohammad Y Al-Hashel said in a statement that CBK market intervention measures fall within its monetary policy which aims to bolster economic recovery in non-oil sectors and to maintain and buttress the attractiveness of the Kuwaiti Dinar as a lucrative and reliable vessel for domestic savings, the latter being a mainstay of monetary policy.
The Governor added that the decisions were taken after a thorough scrutiny of the latest economic, monetary, and banking data and information available, including indicators of general economic performance, local liquidity levels, developments in deposits, and interest rates on both the Kuwaiti Dinar and on main foreign currencies.
Dr Hashel concluded the statement by stressing the Bank’s unwavering policy of vigilant monitoring of economic, monetary, and banking developments according to latest available data and in light of policies implemented towards safeguarding financial and monetary stability. – KUNA