CBK slashes discount rate by 50 base points, from 3.0 to 2.5 pct
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Posted on 2/8/2010
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The Central Bank of Kuwait (CBK) has slashed the discount rate by 50 base points, bringing it down from 3.0 to 2.5 percent, said CBK Governor Sheikh Salem Abdulaziz Al-Sabah on Sunday.
In a statement to KUNA, the governor said that this slash in the discount rate came to create a suitable climate for the growth of non-oil sectors of the national economy, through limiting the credit, especially at a time when all indicators pointed to a continued reduction in inflation, whether imported or local.
He added that the record consumer prices in Kuwait, as monitored by the Central Statistics Department, indicated that the annual inflation rate in April 2009 continued to drop for the seventh month in a row to around 5.2 percent.
The governor also noted the drop in inflation pressure in many of the neighboring countries, as well as in forecasts issued by the International Monetary Fund over inflation rates expected for the region and the world.
Sheikh Salem added that besides the drop in inflation pressure, the national currency continued to be attractive and competitive, making it a "local savings pot", noting that Kuwaiti dinar deposits in local banks created a suitable climate for reducing the discount rate.
Moreover, he said that cutting down the discount rate would help create a suitable climate for banking credit growth, taking into account the link between credit cost and the discount rate within the specified margins.
He added that this reduction in discount rate was the sixth that CBK would make since October 8, 2008, explaining that this fell within the CBK's policy to build confidence in the local economy and boost economic growth.
Sheikh Salem also said that CBK would continue to follow up development in the local economy, and would not hesitate to take the necessary procedures to boost sustainable growth in different economic sectors
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