Iraq central bank cuts interest rates

Following a period of increased stability, the Iraqi central bank has announced that the interest rate will be to reduced from 14 percent to 11 percent due to the decline in inflation.

Annualised inflation has fallen to 9.2 percent from 12.7 percent the previous month, which is a big drop given the fact that inflation was running close to 70 percent at the end of 2006.

Now that there is the first real period of both political and economic stability, the central bank has now brought in a variety of new financial measures.

Rates were hiked up at the end of 2007 to 14 percent, although the scope for economic growth is now far larger.

The bank announced that the reduction in the consumer price index in January, as well as in the opportunity to increase gross domestic product and fight off unemployment were the main factors for a change in direction.

The rate of 11 percent will come into force on 1st March. Last month the bank had cut interest rates by one percent in order to protect the Iraqi economy from the global economic downturn.

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