CBJ raises interest rate on monetary policy instruments by 75 basis points

AMMAN — The Central Bank of Jordan (CBJ) on Thursday decided to increase the interest rate of its various monetary policy instruments by 75 basis points, effective this Sunday, November 6.

The CBJ’s open market operations committee decision was taken in line with interest rate changes in the regional and international monetary markets. The changes are intended to address the pressures of inflation amid rising global inflation rates.

The annual inflation rate in Jordan rose from 2.5 per cent in January 2022 to 5.4 per cent in September 2022, bringing the average inflation rate to 4 per cent during the first nine months of the year.

To guarantee the availability of appropriate financing for vital sectors in the economy, the CBJ decided to continue refinancing JD1.3 billion in programme interest rates, which remain unchanged at 1 per cent for projects based in Amman and 0.5 per cent for projects located in other governorates, while the interest rate shall remain stable within the 10-year loan term for all projects, according to the statement.

The committee also decided to stabilise interest rate with CBJ's programme, at a cost of JD700 million, that supports SMEs, professionals, craftspeople and basic commodity importers, at a rate no more than 2 per cent, until the programme wraps up, Petra reported.

The data also showed that the Kingdom’s foreign currency reserves stand at a reassuring level, totalling $16 billion, covering the Kingdom’s import demand for 8.3 months. 

In September, bank deposits increased by JD2.3 billion to reach JD41.8 billion. Credit facilities offered by banks showed an increase of JD2.3 billion during the same period, totalling JD32.3 billion.

The economic growth rate also increased to 2.9 per cent during the second quarter of this year, after recording a growth of 2.5 per cent during the first quarter of 2022, to reach an average growth rate of 2.7 per cent during the first half of 2022, compared with a growth of 1.8 per cent during the same period of 2021; the highest semi-annual rate recorded since 2017, the Jordan News Agency, Petra, reported. 

Jordan's tourism industry continued to improve during the first nine months of 2022, recording a 140.8 per cent increase to reach $3 billion in revenue, compared with $1.2 billion in the same period of 2021. 

National exports increased by 45.6 per cent during the first eight months of 2022, Petra reported.

Remittances from Jordanians working abroad during the January-August 2022 period went up by 0.6 per cent.

Foreign investments also went up by 96.9 per cent during the first half of the year. 

The CBJ will continue to monitor local, regional and global economic developments, and will stand ready to act proactively to support monetary stability.