CBJ raises interest rate again

AMMAN — The open market operations committee at the Central Bank of Jordan (CBJ) on Sunday decided to raise the interest rates on all monetary policy instruments by 25 basis points, effective June 18, 2017, a bank press release said.

The CBJ took the decision in order to maintain the objective of achieving monetary stability in the Kingdom and in light of rising interest rates in the global and regional financial markets, a CBJ statement said. 

This decision came in line with the bank’s policy framework that aims at maintaining the competitiveness of the Jordanian dinar on one hand and providing an adequate volume of loanable funds at rates that meet the requirements of the economic activity in the Kingdom, on the other. 

In this context, the CBJ will continue to monitor local, regional and global economic developments, and will stand ready to act proactively to support monetary stability, the statement added. 

The US Federal Reserve has raised interest rates, the fourth increase since the financial crisis of 2008, when policymakers pushed rates down to zero.

In order to “guarantee the availability of appropriate financing for vital sectors in the economy, especially small and medium enterprises”, the CBJ decided to keep the refinancing programmes’ interest rates unchanged to stand at 1.75 per cent for projects located in Amman and 1 per cent for projects located in other governorates, while also keeping the current maturities of 10 years. 

CBJ refinancing programmes particularly target the sectors of industry, tourism, agriculture, renewable energy and information technology, according to the bank.  

The amount of funds available under this programme is about JD1.1 billion (equivalent to 5 per cent of the direct facilities granted by banks). 

The total amount of funding granted to the targeted sectors to date reached JD400 million (36.4 per cent of the total amount available), benefiting around 535 projects and creating 6,000 employment opportunities.  

The CBJ has raised the interest rate in February and March this year and in December 2016.