Press Releases

The Board of Directors of the Central Bank of Kuwait (CBK) decided to raise the CBK discount rate by 25 basis points to 5.75% from 5.50%, as of 3-10-2005. This decision was announced by H.E. Sheikh Salem Abdulaziz Al-Sabah, Governor of the Central Bank of Kuwait in a press release to the Kuwaiti News Agency KUNA, where H.E. explained that the decision to raise the discount rate was in line with CBK's policy aimed at maintaining the competitiveness of the Kuwaiti dinar as a store of national savings, in light of the sustained uptrend in interest rates on major currencies, led by the US dollar, to which the exchange rate of the Kuwaiti dinar is linked within specific margins, on the one hand, and given CBK's keenness on further firming the atmosphere of monetary stability and curbing inflationary pressures in the national economy, on the other hand.

H.E. Sheikh Salem Abdulaziz Al-Sabah stated that CBK's sustained and close monitoring of the developments in interest rates on KD deposits with local banks pointed of late to a marked improvement in the local banking units' response to CBK's efforts aimed at raising the interest rates on these deposits, a development which the CBK endeavors to strengthen through increasing the discount rate. H.E. explained that raising the discount rate provides the banking and financial sector units with more leeway in attracting national currency deposits, and therefore in meeting the financing requirements of the various national economic sectors.

It is noted that the discount rate represents a pivotal rate to which are linked, within specific margins, the maximum interest rates on KD-lending transactions at the local banking and financial sector units; consequently, raising the discount rate leads to an immediate increase in these maximum limits.