CBK Raises the Discount Rate by a Half Percentage Point
The Board of Directors of the Central Bank of Kuwait (CBK) decided to raise the discount rate by 0.50% from 3.00% to 3.50% effective December 7, 2022. The CBK Governor, Basel Al-Haroon, pointed out that this decision came in line with the CBK’s balanced and progressive approach that aims to reinforce an environment inducing to economic growth, and maintain the financial and monetary stability and attractiveness of the national currency as a store of the local savings.
The Governor further explained that the decisions of CBK regarding moving the discount rate to affect the levels of interest rates on the Kuwaiti Dinar, and its interventions in the monetary market in keeping with its monetary policy by using various instruments to regulate the levels of liquidity in the banking sector, are all based on thorough reviews of the recent local and international data including the economic performance ratios, e.g. growth and inflation levels, domestic liquidity indicators, deposit movements, and Kuwaiti Dinar and foreign currency interest rates and their expected trends in response to any adverse conditions that may affect the national economy. In addition, the said decision considered the consumer price index and related pressures, given the open nature of the Kuwaiti economy.
The Governor concluded that CBK shall continue its monitoring of the economic and monetary developments, and take the necessary actions, whenever needed, to shield the local monetary stability.