Press Releases

H.E. the Governor of the Central Bank of Kuwait (CBK), Sheikh Salem Abdulaziz Al-Sabah, announced that the CBK Board of Directors decided to reduce the discount rate by half a percentage point to 3.75% from 4.25%. In a statement to the Kuwait News Agency, the CBK governor explained that this reduction comes within the context of CBK's continual review of economic and monetary developments, locally and abroad. Specifically, H.E. clarified that the factors linked to the widening of the margin existing in favour of the Kuwaiti dinar deposits, as compared with the interest rates on US dollar deposits, provided adequate leeway for reducing interest rates on the dinar, while maintaining its competitiveness in attracting national savings.

H.E. also added that the rising levels of liquidity in the domestic money market called for further absorption by the CBK of that excess liquidity. As a result of these factors, the need for an expanded interest rate margin in favour of the Kuwaiti dinar deposits was reduced, particularly as such expanded margin represents an indirect subsidization of local currency deposits with local banks, and entails costs that are no longer justifiable in light of the stability recorded in the domestic economic and monetary conditions and the significant declines in interest rates on deposits in other major currencies, particularly the US dollar.

H.E., CBK's Governor, concluded his statement by pointing that reducing the discount rate results in lowering the ceilings of interest rates charged by local banks on credit in KD, since the maximum limits of these rates are linked to the discount rate according to specific margins.