It was reflected in the loans of citizens, which increased the financial burden on them, and this in turn negatively affected the movement of the markets, which witnessed a clear decline.

Compass – Muhammad Saad

14 Jordanian banks achieved net profits after tax amounting to 900 million dinars in the year 2022, with a growth rate of 38% over the year 2021, while some banks achieved a growth in their profits that exceeded 100%.

Observers consider this growth to be due to a series of interest rate hikes undertaken by the Central Bank of Jordan, in a move the bank justified by preserving the attractiveness of the dinar after the US Federal Reserve’s measures to combat inflation.

The US Federal Reserve announced its intention to approve a new increase in the interest rate by 25 basis points at its next meeting, according to the minutes of the bank’s meeting issued last Wednesday evening.

The Federal Reserve will hold its next interest rate meeting on March 22, and the bank raised the interest rate during its meeting early this month by 25 basis points to a range of 4.5% – 4.75%.

“Almost all participants agreed that it was appropriate to raise the Fed’s target range by 25 basis points,” the minutes said.

The participants in the meeting also affirmed their insistence on “raising interest rates and keeping them high” until the target inflation rate is reached at 2%.

Economic expert Mounir Dayyeh said that many economic sectors have been subjected to severe challenges due to the rise in interest rates and the increase in borrowing costs, as the Central Bank raised interest rates last year seven consecutive hikes, which were immediately reflected in the same proportions on citizens’ loans, which increased the financial burdens imposed on them.

Diyah explained, in statements to:compassThat “the huge profits achieved by the banks due to the high interest rates were reflected on the borrowers and the citizen paid for them in his daily living, which has become difficult and harsh due to the increase in financial obligations.”

He added, “High interest rates constituted a new burden and a difficult challenge for the citizen, whose purchasing power declined and limited income eroded, and this in turn reflected negatively on the movement of the markets, which witnessed a clear decline during the past year due to the citizen’s reluctance to buy and the change in consumption priorities.”

The minutes of the last meeting of the US Federal Reserve on monetary policy showed the agreement of the majority of members to slow the pace of raising the main interest, but they also agreed that the risks of high inflation are still a “major factor” in shaping monetary policy, and confirmed the continuation of raising interest rates until inflation is controlled.

Dayyah warned, saying that “the citizen today pays the price of the inflation of the profits of some sectors without protection from the government or the parliament, and the citizen faces the challenges of life alone without supervision or restrictions for the work of some sectors that have expanded at the expense of his daily life and pay the price for that in his livelihood and his ability to secure a decent life for his family.” .

He pointed out that the high borrowing costs for individuals and companies increased inflation and high prices, as this was evident in the data of the Department of Statistics, where the inflation rate for January of this year reached 3.7%, and therefore raising interest rates in Jordan had no role in reducing inflation.

“The increase in interest rates caused an increase in bank profits and an increase in the indebtedness of individuals, which exceeded 12 billion dinars, as the percentage of indebtedness of individuals to their income amounted to more than 63%, going to repay housing loans, a loan for cars, education and other basic needs of the citizen,” according to Diyah.

In his statements, he stressed, “We want a recovering economy in an integrated manner, and that one sector does not overwhelm another, and that there is justice in the distribution of wealth, and that the growth rates in profits are close between sectors, and that the decision-maker realizes the citizen’s ability to endure and not submit to the demands of some sectors at the expense of the citizen’s life.” and his livelihood.”