Kuwait's central bank reduced its key discount rate by 50 basis points to 2.5%, thus reducing its borrowing costs, so as to boost up its growth in the non oil sector, while the inflation is keeping low.

Since October 2008 the central bank has reduced its key rate by 200 basis points where as the last reduction was done in May 2009.

Central Bank Governor, Sheikh Salem Abdul-Aziz al-Sabah, said, " The cut is aimed at enhancing growth in non-oil sectors of the national economy by minimising the cost of credit. The bank was able to trim the rate as all indicators pointed to a continued reduction of inflation, whether imported or local. "

He further added, "The dinar currency continued to be attractive and competitive, making it a local savings pot and that dinar deposits in local banks created a suitable climate for reducing the discount rate."

John Sfakianakis, Chief Economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh, said, "The move is intended to boost growth and help private sector borrowing and overall investments whilst it has little less to worry about inflation as the dollar is strengthening and domestic price pressures are not building up."

Kuwait's non oil sector contributes 46 percent of its gross domestic product and its economy is expected to grow 3.4 percent after the contraction of 2 percent during 2009.

During 2008 the consumer's price growth dropped in the Gulf and countries like the United Arab Emirates and Qatar experienced deflation. Inflation in Kuwait is expected to remain at 4.3% down from 10.5% in 2008.