Central Bank lowers interest rates again

AMMAN — The Central Bank of Jordan has decided to lower interest rates by 0.25 per cent, ranging between 1.75 and 2 per cent.

The announcement was made on Thursday, being the second of its kind in less than two months.

"This is our response to the international and regional changes in interest rates," read a statement from the Central Bank.

Recently, the American Federal Reserve decided to lower its interest rates as well, and many banks around the world were quick to follow its lead.

"Although this is great for anyone thinking about getting a loan, the problem in Jordan is that banks do not necessarily follow the Central Bank's rules," said Osama Sultan, an economy professor at the Hashemite University.

The government's decision to float interest rates back in 1990 meant that it is now up to banks to set their interest rates at whatever percentage they feel "is best for them and their clients", Sultan pointed out.

 “The problem is, however, that a bank can demand outrageous interest rates and no one would be able to stop that,” he added.

For Mohammed Halhoul, an economist at a private marketing solutions company, the Central Bank's decision is "amazing if only it were sure to be followed".

"I think the government knows that their taxation is burdening, the living costs in Jordan are high, and the salaries are low, so I guess it is trying its best to help people cover their needs at least through good loans," he said over the phone.

"The government has to make sure, however, that banks will at least take the global reduction in interest rates into account," he concluded.