Economists expect positive impact on businesses from CBJ’s lowering of interest rates

AMMAN — Economists on Tuesday welcomed the Central Bank of Jordan’s (CBJ) decision to lower interest rates on all monetary policy instruments by 100 basis points starting on Monday.

“This is a step in the right direction that will help the economy to move forward positively,” said economist Reem Badran.

Badran told The Jordan Times that the CBJ lowered the interest rate by 100 points, and75 points on overnight deposits, and that this step is connected with the US Federal Reserve’s earlier move.

“Usually, when there is a major economic issue or slow-down, countries like Jordan and many others decide to lower the interest rate to provide less expensive access for individuals and companies to loans,” Badran said.

Meanwhile, Economist Husam Ayesh said the CBJ’s step is “positive”. However he said that the decision to lower the interest rates “is taken out of compulsion, because the US Federal Reserve took the decision recently to lower the interest rate, and not because of a proper study of local economic conditions, which has the potential to be less positively impactful than expected, especially because it came at a time of global conditions that limit its benefits”.

“The step will surely help many sectors because it will result in more economic activities and ensure cash flow in the market and more demand on lending facilities,” Ayesh told The Jordan Times.

Economist Mazin Marji also commended the CBJ’s step, describing it as “a good move, taking into consideration the situation of Jordan and the whole world”.

“This move will hopefully encourage people to borrow money at lower rates and ensure liquidity in the market,” Marji told The Jordan Times.

“Since we are going through a crisis because of the coronavirus for an indefinite period, the hope for the government is to consider additional steps to minimise the severe impact that is expected, which will slow down the economy,” Badran noted.

Such steps, she explained, could include the government revisiting some of its policies and regulations, for example, cancelling the income tax for this year and examining different possibilities for employees and employers’ contributions to the Social Security Corporation.

“I believe everyone should cooperate in this crisis, because many businesses and employees will be affected by the current economic situation,” Badran said.