Press Releases

The CBK Board of Directors has decided to raise the discount rate by 25 basis points to 5.50% from 5.25%, effective from Sunday 3-7-2005. In a press statement to the Kuwait News Agency (KUNA), H.E. the Governor of the Central Bank of Kuwait (CBK), Sheikh Salem Abdulaziz Al-Sabah, emphasized CBK's keenness on ensuring the conformity of KD interest rates with the trends in interest rates on major international currencies, particularly the US dollar, so as to provide an atmosphere that enhances the firm bases of monetary stability in the national economy. H.E. the Governor explained that the competitiveness of the national currency as a store of domestic savings is a key element of monetary stability in the Kuwaiti economy, as these savings represent the main source which the local banking and financial system units draw on to meet the financing requirements of their customers' various economic activities. H.E. the Governor added that the openness of the national economy to the outside world, its freedom from any constraints on the flow of funds for capital and current transactions, and the pegging of the KD to the US dollar within specific margins, necessitate the conformity of KD interest rates with the trends in interest rates on major international currencies, particularly the US dollar.

Pointing to CBK's consecutive increases of its discount rates during the last few months for the purpose of maintaining the competitiveness of the national currency in the face of the rises witnessed in interest rates on major currencies, particularly the US dollar, H.E. the Governor added that CBK supplemented these measures with additional efforts exerted within the instruments available to it, so as to further firm up the conditions that are conducive to the growth of national-currency deposits with the local banking and financial system units, pointing to the role of these efforts in curbing the growth of inflationary pressures and firmly establishing the bases of monetary stability in light of indicators of accelerating domestic economic activity.

In closing, H.E. the Governor emphasized the continued vigilance by CBK of the developments and events in economic and monetary conditions on the domestic and international fronts, and emphasized that CBK will not hesitate to move in the appropriate direction to ensure the continued competitiveness of KD interest rates in light of the upward trends in interest rates on major international currencies, particularly the US dollar, so as to further enhance the atmosphere of monetary stability in the national economy and to maintain the purchasing power of the national currency, while endeavoring to limit the growth of inflationary pressures in the domestic economy.