Central Bank of Jordan maintains interest rates unchanged
The Open Market Operations Committee of the Central Bank of Jordan (CBJ) on Thursday decided to keep interest rates on monetary policy instruments unchanged.
The bank affirmed its "full" commitment to closely following up on developments related to the national economy's performance, especially monetary and banking indicators, the Jordan News Agency, Petra, reported.
The CBJ said that this move coincides with close follow-up of global economic developments, financial and commodity market performance, and regional and global central bank monetary policy plans to counter inflationrelated pressures, as well as amidst of geopolitical uncertainties in the region.
The committee, during its first meeting of the year, stressed its confidence in the national economy continuing positive, adding that the CBJ’s foreign reserves have reached $18.2 billion, which is sufficient to cover the Kingdom’s imports of goods and services for 7.9 months.
The committee also referred to the increase in bank deposits (year-on-year) by JD1.6 billion in 2023, with a growth of 3.9 per cent to JD43.7 billion.
The credit facilities granted by banks (year-on-year) also increased by JD1 billion, with a growth rate of 3.5 per cent.
The CBJ also said that the tourism income recorded a surge of 27.4 per cent in the first three quarters of 2023, which exceeded expectations, to reach “unprecedented historic” level of JD5.2 billion.
Additionally, Jordanian expatriates’ remittances also increased by 1.4 per cent to JD2.5 billion in 2023.
This positive trend was supported by balanced economic policies, mainly monetary measures, which curbed inflationary pressures. In 2023, the inflation rate totaled 2.1 per cent, half of the level recorded in 2022.
The CBJ estimates showed that the national economy is capable of achieving a growth rate of 2.6 per cent in 2023, an increase of 0.2 percentage points from the previous year
The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) has pushed up the interest rates by 200 basis points (bps) at its first meeting in 2024, according to a press release on February 1st.
The CBE said that the decision is necessary to stabilize inflation expectations and set the policy rate at suitably restrictive levels.
Accordingly, the overnight deposit rate and the overnight lending rate rose to 21.25% and 22.25%, respectively. Also, the rate of the main operation increased to 21.75% and the discount rate went up to 21.75%.
Given the ongoing impact of major central banks' policy rate hikes on demand, the pace of world economic growth has continued to decline, the CBE said.
Furthermore, the ongoing effects of tighter monetary policy cycles in developed and developing market economies have reduced global inflationary pressures, and inflation projections in these areas have decreased since the last meeting.
“However, increasing geopolitical tensions and ongoing trade disruptions in the Red Sea have raised uncertainty surrounding the inflation outlook, particularly concerning supply-chain shocks and their impact on key commodity prices,” the press release highlighted.
Due to the prolonged regional instability and maritime trade disruptions to in the Red Sea impacting the services sector, the real gross domestic product (GDP) growth is thus predicted to soften during the current fiscal year (FY) 2023/2024 before progressively rising thereafter, the CBE added.
Pricing and consumption patterns are still being impacted by the persistently high levels of widespread inflationary pressures, the CBE noted, adding that the continuous interruptions to maritime trade and geopolitical unpredictability are driving up inflationary pressures both domestically and internationally.
The CBE asserted that MPC stands ready to employ all accessible tools to uphold a sufficiently restrictive policy stance, preserving the declining trend in underlying inflation. In 2023, the CBE raised interest rates by a total of 300 basis points (bps), of which 200 bps in March and 100 bps in August. It is worth mentioning that Egypt's annual headline dropped to 35.2% in December, compared to 36.4% in November.