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KUWAIT CITY, July 1: The Central Bank’s policies, particularly its adherence to a basket of currencies exchange rate system amidst global economic uncertainties questions whether the Central Bank’s policies, described as “prudent” in media, are truly effective given current economic challenges like geopolitical tensions, inflation, and high debt costs due to strict monetary policies, reports Al-Jarida daily.

Here is a brief look at the key concerns which include: Exchange Rate Policy — Kuwait’s unique basket of currencies system is justified for monetary policy flexibility and to avoid risks associated with a single major currency. However, the article questions whether aligning with the US Federal Reserve’s policies, despite different exchange rate mechanisms, adequately addresses local economic needs or overly prioritizes currency stability.

Inflation Management — Despite efforts to preserve purchasing power and mitigate inflationary pressures, Kuwait has experienced higher inflation rates compared to major trading partners. This disparity raises doubts about the effectiveness of current monetary strategies in controlling inflation and maintaining economic stability.

Credit Policy and Economic Growth — Criticism extends to the Central Bank’s approach to credit policy, suggesting it may not effectively promote balanced economic growth across sectors. Concerns are raised about the impact of high inflation and interest rates on citizens, indicating a disconnect between policy measures and their socioeconomic effects.

Role of the Central Bank — The article calls for a reevaluation of the Central Bank’s role beyond exchange rate policies and global monetary trends. It emphasizes the need for a balanced approach that considers local economic conditions and sectors, rather than solely reacting to external economic indicators. The challenge is for the Central Bank to reassess its policies to better address local economic challenges and prioritize sustainable economic growth and stability.

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