Mubasher: The Central Bank of Kuwait (CBK) decided to lift the discount rate by 0.50% to 4% from 3.50% starting from Thursday, 26 January 2023.
The decision is part of recent developments in local and international economic conditions, in addition to Kuwait’s local monetary and banking indicators as well as movements on KWD interest rate in the local market, according to the Governor and Chairman of the CBK, Basel Al Haroon.
All of these factors are driven by the changes to the interest rates on the other major currencies, Al Haroon added.
He further noted that the decision to raise the CBK’s discount rate aligned with a progressive approach adopted by the central bank to endorse the financial and monetary stability of the banking and financial units. This step would also preserve the attractiveness of the Kuwaiti currency as a lucrative and reliable store for domestic savings.
Al Haroon elaborated that savings form a key source of funding provided by the financial and banking units to the national economic sectors, adding that they foster an environment conducive to economic sustainable growth.
The CBK raised only the discount rate by 50 basis points (bps) in the fourth quarter (Q4) of 2022; a move that ticked interest rate differences. Meanwhile, the Gulf nation’s suggested debt law would allow Kuwait to tap into local and international debt markets, according to a recent report by the CBK.
The US’ Federal Reserve System (Fed) is holding its next meeting at the end of January, with its rate announcement to be made on 1 February 2023.
Global Head of Strategy and Trading Services at the international brokerage ADSS, Srijan Katyal, commented: “Calibration will be key, meaning a 25-basis point raise is a likely outcome from the Fed’s January meeting.”
