Kuwait interest rate cut hailedOctober 9th, 2008 - 11:09 am ICT by IANS
Dubai, Oct 9 (IANS) A decision by Kuwait’s central bank to cut interest rates has been hailed by the bankers and financial analysts as a step in the right direction.The Central Bank of Kuwait (CBK) cut interest rates by 125 basis points Wednesday in the face of deteriorating state of the local financial market caused by the global financial crisis.
The benchmark discount rate is down to 4.5 percent from 5.75 percent and the repo rate has fallen to 2.5 percent from 3.5 percent.
Kuwait International Bank chairman Abdulwahab Al-Wazzan told the state-run Kuwait News Agency (KUNA) that the plan was a well thought one and would benefit the banking system in Kuwait, making it easier to lend money and provide credit and deposits.
“The CBK wants to reduce the burden of inflation and consumer loans,” he said.
He, however, stressed that Kuwaiti banks were in extremely good shape and that there was no case for worry, and stated the step was taken to reinforce remaining procedures that maintain credit and financial stability in the country.
Kuwait’s former minister for planning Ali Al-Moussa also hailed the decision as a good one, but called for further steps.
“The state of the Kuwaiti market has become extremely difficult and people are waiting for many more measures to be taken by more than one body,” he said.
Head of Kuwait Economic Society Rola Dashti, called for a further cut to benefit the country.
She also demanded more strict financial policies and a liquidity of at least two billion Kuwaiti dinars ($7.5 billion) from government institutions, to “solve the crisis and protect the savings of the people of Kuwait”.
The Kuwait stock market is at a 12-month low but the index is still the best in the Gulf countries.
Year to date, the Kuwait exchange fell by 12 percent compared to its counterparts in Saudi Arabia and Dubai which fell by over 40 percent.