Iraq to cut interest rates to 14% next month

Baghdad: Iraq's central bank has decided to slash interest rates by one percentage point to 14 per cent starting January 4, as inflation falls, in order to boost growth dented by sliding oil prices, the bank said in statement.

"Owing to the fall of the consumer price index in November and seeking to boost gross domestic product [GPD] ... the Iraqi central bank decided to cut rates to 14 per cent from 15 per cent ... " the statement said.

Iraq's core inflation fell to an annual 12.7 per cent in November, from 13.6 per cent in October.

The IMF said last week that economic activity had picked up in Iraq as violence falls, but that the steep fall in oil prices had worsened its fiscal outlook. It did not give figures for GDP growth.

A previous IMF forecast in September had predicted growth of nine per cent for 2009, but with oil sliding as the global economy moves into recession, that now seems unlikely.

Crude, which supplies some 95 per cent of Iraqi government revenues, traded at $36 (Dh132.3) a barrel on Friday, down $110 a barrel from its mid-July peak.

In November, Iraq's central bank cut interest rates by one point to help shield the economy.