Press Releases

H.E. the Governor of the Central Bank of Kuwait (CBK), Sheikh Salem Abdulaziz Al-Sabah, announced that the CBK Board of Directors has decided to raise the discount rate by 25 basis points to 5.25% from 5%, effective from 23-3-2005. H.E. the Governor explained in a press statement to the Kuwait News Agency (KUNA) that the decision to raise the discount rate reflects CBK's efforts to maintain the stability of the monetary environment in the national economy, based on its continual follow-up of the economic, monetary and banking developments on both the domestic and international fronts. H.E. the Governor added that the sustained uptrend in interest rates on major international currencies, particularly the US dollar, necessitates the conformity of KD interest rates with these trends, taking into consideration the rate of activity in the various sectors of the national economy, its structure which is characterized by its openness to the outside world, and the fact that the KD is pegged within margins to the US dollar.

H.E. the Governor added that the increase in the discount rate will enhance the competitiveness of the national currency, as it will contribute to providing local banks with more leeway in attracting customer deposits in Kuwaiti dinar; noting that the local banking and financial system units draw on these deposits to meet the financing requirements of the various sectors of the national economy. CBK's discount rate is a central rate to which are linked, within determined margins, the maximum interest rates for KD lending transactions at the local banking and financial system units. Consequently, increasing the discount rate leads to raising these maximum limits.

Finally, H.E. the Governor emphasized the continued vigilance by CBK of developments in domestic banking, monetary and economic conditions, and trends of interest rates on international currencies, along with CBK's readiness to move again if need be to maintain the stability of the monetary environment in the national economy.