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 has decided to raise the discount rate by a quarter percentage point to 5% from 4.75% effective from 3 February 2005. H.E. the Governor explained that the decision aimed at strengthening monetary stability in the national economy in response to domestic monetary, banking and economic developments on the one hand, and to developments in interest rate on major currencies particularly the US dollar on the other hand.

H.E. the Governor added that the structure of the national economy and its open financial and commercial relations with the outside world necessitate that domestic interest rates on the Kuwaiti Dinar (KD) conform with developments and trends in interest rates on major currencies particularly the US dollar to which the KD is pegged within certain margins, taking into account the domestic monetary stability needs in the light of prevailing monetary, banking and economic conditions. H.E. the Governor said that the discount rate raise is intended to maintain the competitiveness of the national currency to attract local savings at the time when interest rates on major currencies and most importantly the US dollar are rising. H.E. added that these savings play a central role in enabling the domestic banking and financial units to meet the financing requirements of various national economic sectors.

H.E. the Governor indicated that a rise in the discount rate automatically leads to increases in the maximum KD lending interest rate limits in domestic banking and financial units, enabling them to attract more KD deposits and thus increase their abilities to provide loans to their customers.

Finally, H.E. the Governor emphasized that CBK shall continue to monitor developments in domestic monetary, banking, and economic conditions, and remains ready to move in the appropriate time using available monetary policy instruments to strengthen monetary stability in the country and ensure conformity of domestic interest rates to trends in interest rates on major international currencies.