The open market operations committee at the Central Bank of Jordan (CBJ) has announced a 50 basis point reduction in interest rates on all monetary policy instruments, effective Sunday, September 22, 2024.
This move marks the conclusion of the monetary tightening cycle initiated in March 2022, in line with global and regional central banks. The policy aimed to maintain monetary stability, protect the attractiveness of the Jordanian dinar, and contain inflationary pressures following the COVID-19 pandemic recovery.
The committee cited the achievement of its monetary objectives as the reason for the rate cut. Key indicators include the stability of the dinar, the rise of foreign reserves to $20 billion by the end of August 2024, sufficient to cover 8.7 months of imports, and the decrease in dollarization from 19.4% in March 2022 to 18.5% in July 2024. Additionally, inflation dropped from 5.4% in September 2022 to 1.9% in August 2024.
Despite interest rate hikes in recent years, the interest rate margin in ba
nks narrowed by 114 basis points by July 2024, reaching its lowest level in three decades at 2.24%, reflecting greater banking efficiency.
The banking sector remains strong, with deposits rising to JD45.7 billion and credit facilities growing to JD34.6 billion by the end of July 2024. Capital levels are at 17.6%, among the highest in the region, and legal liquidity levels stand at 138.8%, well above the required 100%. Non-performing loans were 5.6% at the end of the first half of 2024.
On the economic front, national exports grew by 5.4% in the first half of 2024, although the value of total exports declined by 1% due to falling global commodity prices, reaching $3.6 billion. However, the trade balance deficit narrowed by 2.3%. Economic growth was recorded at 2% in the first quarter of 2024, with expectations of 2.4% for the year.
The Central Bank reaffirmed its commitment to monitoring economic developments and taking necessary actions to safeguard monetary stability and foster economic growth.
Source:
Jordan News Agency