AMMAN, 8 November 2005 — The Central Bank of Jordan on Sunday raised the rediscount rate by a 0.25 percentage point, to 6.25 percent from 6 percent, to quell inflationary pressures and match a similar rise in the US dollar rates, the CBJ Governor Umayya Touqan announced.
“The interest rate hike is designed to check the inflationary pressures inherent in the expansion in money supply and the rise in the macroeconomic demand consequent on the growth of economic activity in the country,” Touqan said. The CBJ step comes also as a response to the US Federal Reserve’s decision last week to hike the basic dollar interest rate by 0.25 percentage point, to 4 percent from 3.75 percent, he added.
The CBJ has been at pains to preserve an interest rate differential between the Jordanian dinar and the greenback in order to encourage Jordanians to keep their deposits in the national currency, economists said.
The Jordanian dinar has been pegged to the US dollar since October 1995.