AMMAN, 14 May 2006 — The Central Bank of Jordan (CBJ) yesterday raised the main interest rate on the dinar by a 0.25 percentage point, to 7.25 per cent from 7 percent, to cope with a similar interest rate hike on the US dollar, according to a CBJ statement. The hike, which goes into effect as of Sunday, is aimed at “containing international inflation pressures” creeping into the country through its open market economy and “safeguarding the stability of the dinar,” the statement said. The step followed the US Federal Reserve’s decision to raise the main dollar interest rate by a 0.25 percentage point last week, to 5 percent from 4.75 percent.
The Jordanian monetary authorities have adopted a tradition over the past decade of retaining an interest rate differential between the dinar and the dollar with a view to convincing citizens to keep their bank deposits in the local currency.
