Kuwait’s central bank cut interest rates on some monetary policy instruments in an effort to ease pressure on the currency while helping the economy cope with the impact of the Covid-19 pandemic.
In a surprise move, the central bank also said it would keep the discount rate at 1.5%, maintaining the existing cap for loans extended to customers in Kuwaiti dinars. At the same time, it lowered by 0.125% the repo rate and yields on term deposits, direct intervention instruments and public debt instruments across the entire yield curve up to the 10-year term. The change comes into effect Wednesday.
“Cutting the repo rate should drive further improvement in Kuwaiti banks’ cost of funding, which was elevated last year, and support the margin outlook,” said Bloomberg Intelligence analyst Edmond Christou. “Any support is welcome given the pressure Kuwaiti banks are facing on revenues from Covid-19 relief measures and on the bottom line from stringent reserving requirement.”
Central banks across the Gulf reduced interest rates in March to bolster stimulus after the U.S. Federal Reserve lowered its benchmark to near zero to counter the economic fallout of the coronavirus.
No comments:
Post a Comment