AMMAN, 25 September 2005 — The Central Bank of Jordan (CBJ) yesterday hiked the rediscount rate by 0.5 percentage points, to 5.5 percent from 5 percent, in a bid to check inflation trends and cope with last week’s decision by the US Federal Reserve to raise the dollar interest rates by 0.25 percentage points, according to an official statement. “The decision is designed to deal with increasing inflation pressures resulting from growing liquidity and macroeconomic demand as well as latest local and international developments,” the CBJ said in a statement.
The government’s decision this week to hike prices of fuel products for the second time in less than two months stirred speculation on the part of economists that the country was heading to a period of higher inflation.
Since the national currency, the dinar, was pegged to the US dollar in October 1995, the government has been at pains to retain an interest rate differential between the dinar and the Greenback with a view to encouraging Jordanians to keep their savings in the national currency. “The CBJ will continue to monitor major economic developments and to take the necessary and well-considered measures that suit macroeconomic fundamentals and ensure monetary stability,” the statement said.