Monetary Policy and the Central Bank in Jordan

30 Pages Posted: 21 Sep 2009

See all articles by Samar Maziad

Samar Maziad

International Monetary Fund (IMF)

Date Written: September 2009


The Central Bank of Jordan (CBJ) and its operational independence changed over time in line with the evolution of the monetary policy framework and as a result of the currency crisis in the late 1980s. The paper examines the developments of the CBJ, its independence in conducting monetary policy and the various instruments at its disposal, with special focus on the certificates of deposit (CDs) market, the main monetary policy instrument, and the treasury bill market. The paper also examines the issue of the autonomy of monetary policy in Jordan given the influence of world interest rates. Although, Jordan operates an exchange rate peg, which has been fixed to the USD since 1995, there is some room for flexibility in operating monetary policy in the short-run, where the CBJ has some autonomy in determining the spread between domestic and US interest rates. VAR and VECM results suggest that the response of the policy rate in Jordan to innovations in the US Federal Fund's rate is less than one-for-one. In the short-run, the CBJ appears to conduct monetary policy in response to domestic inflation and a measure of the domestic output gap.

Keywords: Central bank autonomy, Central bank role, Central banks, Economic models, Exchange rate regimes, Jordan, Monetary policy, Monetary policy instruments

Suggested Citation

Maziad, Samar, Monetary Policy and the Central Bank in Jordan (September 2009). IMF Working Paper No. 09/191, Available at SSRN:

Samar Maziad (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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