International Finance

Kuwait firm on keeping discount rate at 3% despite global changes

Kuwait discount rate
Kuwait took the decision to keep the discount rate unchanged to maintain the competitiveness of the national currency

Kuwait’s central bank announced on Wednesday, its decision to keep the discount rate unchanged at 3 percent.  Central Bank of Kuwait governor Mohammad Al Hashel said that the decision was taken to improve the economic conditions of the country.

Kuwait has been working on improving the non- inflationary environment to improve the economy. This is a major step towards it.  The decision to keep the Kuwait discount rate has been made after a long process of reviewing and analysing the financial and economic status in Kuwait as well as economic conditions throughout the world.

The Kuwait Dinar had recently fallen by 0.2 percent against the US Dollars. The government and monetary authority have been taking several measures to avoid any further fall of the currency.

The governor further added that the competitiveness and value of the currency should be maintained and improved, to keep it as a reliable source of domestic savings.

The US Fed had recently reduced interest rates by 25 basis points. It was after a very long duration that the US rates have been reduced. The US rate cut has affected all major currencies as well as national interest rates. Other countries in the Middle East including the United Arab Emirates, Qatar, Bahrain, and Saudi Arabia have reduced their interest rates primarily as a result of the US rate cut. But Kuwait has remained firm on keeping its discount rate unchanged at 3 percent.

The current Kuwait discount rate was adopted in March 2018. The rate has not been changed since then, even though US fed rates have been changed consecutively three times since then.

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