Yemen slashes key interest rate

SANAA: Yemen’s central bank cut its deposit rate, the key rate which it uses to adjust monetary policy, by 3 percentage points to 15 percent, the bank said in a statement carried by state news agency SABA.
The central bank last trimmed the rate, a benchmark for commercial banks taking deposits from their customers, in October, when there was a cut of 2 percentage points to 18 percent as inflation came down to single digits and the Yemeni rial stabilized following political turmoil.
An International Monetary Fund official said recently that Yemen had room to gradually reduce interest rates in order to support economic recovery as inflation continued to decline.
The official inflation rate in Yemen spiraled as high as 25 percent year-on-year in October 2011.
It subsided to 5.5 percent in November 2012, the latest central bank data show. The Yemeni rial tumbled to about 243 to the US dollar in 2011 during a year of political unrest.
The currency has now stabilized around 215.
Yemen’s economy should expand by around 4 percent this year, the IMF has forecast, after it stabilized in 2012.
It shrank 10.5 percent in 2011, the first drop since the 1990 unification of the north and south of the country.