MENA Bridge · Market Research
Jordan Cost of Capital & Inflation Tracker
What money costs in Jordan, what prices are doing, and how both compare with the dollar bloc Jordan is pegged to.
CBJ main rate
5.75%
Unchanged since 14 December 2025
Held at all five 2026 meetings
Headline inflation
2.79%
Year on year, June 2026
▼ 0.04 pp vs previous month
Rents inflation
4.35%
Year on year, June 2026
Re-measured twice a year
Lending rate
7.54%
Loans and advances, May 2026
▼ 0.02 pp vs previous month
Deposit–lending spread
2.61 pp
Lending less deposit rate, May 2026
Unchanged on the previous month
Real policy rate
2.96%
Main rate less headline inflation, June 2026
▲ 0.04 pp vs previous month
Period
A · The price of money
The Central Bank of Jordan does not set one rate. It sets a corridor, and the market decides where inside it to trade.
Jordan’s policy corridor
Shaded band runs from the overnight deposit window to the overnight repo rate. The gold line is where banks actually lend to each other.
Policy rates: Jordan and the dollar bloc
Jordan against the United States, the euro area, Saudi Arabia and Kuwait.
Jordan’s effective policy rate is the floor, not the headline. The overnight interbank rate has traded between 10 and 15 basis points above the deposit window in every one of the last 77 months, averaging 11. It has never approached the ceiling. Jordanian banks hold a persistent surplus of dinars, so the market prices off whatever the Central Bank pays on deposits — which makes 5.50%, not 5.75%, the rate that actually clears. The corridor itself has been narrowed twice, from 150 basis points to 125 in March 2020 and to 100 in June 2022; on both occasions conditions tightened by more than the announced move implied.
Where nine central banks stand today
Bar spans each corridor from floor to ceiling; the diamond marks the rate that bank announces.
Jordan’s premium over the Federal Reserve
Main rate less the US target mid-point, monthly.
These are not the same rung of the same ladder. Jordan, the euro area, the UAE and Qatar announce a floor; Saudi Arabia, Kuwait and Oman announce a ceiling; and the US figure is an arithmetic mid-point of a target band that no institution transacts at. Compared floor to floor — the only honest comparison — Jordan sits 125 bp above Bahrain, 165 above Qatar, 175 above Saudi Arabia, 185 above the UAE, 200 above the United States and 325 above the euro area. Every currency shown except the Kuwaiti dinar is pegged to the US dollar, which is why the whole group moved within forty-eight hours of each other in December 2025. Bahrain’s figure is its designated key policy rate, the one-week deposit rate, not the overnight rate it quotes in press releases. Oman publishes no rate level on its own website at all; the figure shown is reported by Reuters and is consistent with Oman’s published rule of the US upper bound plus 50 bp.
Jordan does not run an independent monetary policy. The dinar has been pegged to the US dollar since 1995. Across the last seventy-eight months Jordan’s premium over the Federal Reserve has stayed between 212 and 238 basis points and currently sits at 212.5 — the flat line above. The Central Bank imports the Federal Reserve’s decisions and adds a broadly fixed margin. For anyone underwriting a Jordanian asset that has a practical consequence: the direction of Jordanian rates is set in Washington, not Amman, so a view on financing costs eighteen months out is really a view on the Federal Reserve. The premium is not arbitrary — it is what the Central Bank must pay to keep dinars attractive against dollars at a fixed exchange rate, in effect the market price of the peg.
Where the market sits inside the corridor
The full 100 bp corridor, measured up from the deposit-window floor. Monthly, to May 2026.
Reading this chart
What the gold line is telling you
The shaded band is the whole corridor. Zero on this axis is the deposit-window floor, where the Central Bank pays banks to park surplus dinars overnight; the top of the band, 100 basis points up, is the overnight repo rate, where a bank short of cash can borrow. Every overnight transaction in Jordan happens somewhere inside that band.
The gold line is where banks actually lend to each other. It sits at 10 basis points — a tenth of the way up — and has not been above 15 in seventy-seven months. It has never gone near the ceiling.
What that means: the banking system is permanently long liquidity. No bank needs to bid for dinars, so the interbank rate falls to the floor and stays there. The marginal cost of dinar funding is therefore 5.50%, not the 5.75% headline — every rate a bank quotes is built off the floor plus its own margin.
What to watch for: if this line ever starts climbing towards the ceiling, liquidity has tightened — and it will show here before it shows in lending rates. That makes it the earliest warning signal on this page.
B · What borrowers actually pay
A policy rate is a signal. The lending rate is the number that appears in a term sheet.
Policy, deposit and lending rates
Bars show the spread between the lending rate and the deposit rate, on the right axis.
How much of the cuts reached borrowers
Cumulative change since the July 2023 policy peak.
How the spread is calculated. One subtraction: the weighted-average rate banks charge on loans and advances, less the weighted-average rate they pay on time deposits, in the same month — currently 7.54% less 4.93% = 2.61 percentage points. Both series are published monthly by the Central Bank as weighted averages across all licensed banks, so each is an average over every loan and every deposit outstanding, not a headline product rate. This is a gross interest margin, not a profit margin — it is measured before credit losses, operating costs, reserve requirements and tax, so it is not what a bank earns. Read it as a direction: a widening spread means banks are keeping more of each rate move, a narrowing one means they are passing it on.
Banks passed on the cuts — and absorbed the cost. Since the July 2023 peak the Central Bank has cut 175 basis points. The weighted-average lending rate has fallen 154 of them, about 88%. But the deposit rate has fallen only 77 basis points, about 44%. The spread between them has therefore compressed by 77 basis points rather than widening, from 3.38 to 2.61 percentage points. Borrowers received most of the easing; savers kept more of their return than a simple pass-through would have given them; bank margins took the difference.
C · Prices
Headline inflation, the housing component, and the rents sub-index — the only monthly housing-cost signal Jordan publishes.
Consumer prices, rebased
All three series indexed to the first month of the selected window. Dots on the rents line mark its twice-yearly measurements.
Inflation rates
Year-on-year change.
Rents are measured twice a year, so only the dots are data. The Department of Statistics re-measures the rents sub-index in June and December and carries the value unchanged in between: across seventy-seven months it moved only fifteen times, and thirteen of those were a June or a December. The two exceptions, November 2021 and January 2026, were revisions of two and three hundredths of an index point. The line here therefore marks each measurement with a point and joins them directly; the segment between two points is interpolation, not observation, and the carried-forward months are not drawn. Read the level at the dots and the direction from the slope. The consumer price series begins in January 2020 because the published table splices two base periods with no overlapping month, so no earlier comparison is valid.
What is driving inflation
All twelve expenditure divisions, year on year. Housing highlighted.
Producer prices
The closest available proxy for construction input costs. Jordan publishes no construction cost index.
Two gaps worth knowing about. The producer price series has no observation for February 2021 — the source omits it entirely, and it is bridged rather than estimated here. Producer prices also run about three months behind consumer prices, so that panel will always be the least current on this page. The Department of Statistics does not publish expenditure weights through its data service, so the division chart ranks divisions by their own rate of change rather than by weighted contribution to the headline.
D · The real cost of capital
Nominal rates less realised inflation. This is what capital actually costs once prices are taken out.
Real policy rate
Main rate and the deposit-window floor, each less headline inflation.
Real lending rate
What a borrower pays in real terms — not published anywhere in Jordan.
How these are calculated. Real rates here are ex post: the nominal rate less inflation that has already been realised over the preceding twelve months. Jordan publishes no survey of inflation expectations, so a forward-looking real rate cannot be constructed from official data and is not attempted. At June 2026 the real policy rate stands at 2.96% and the real lending rate at 4.71%. A real rate is itself a rate, so it is quoted as a percentage; a change in a rate, or the gap between two rates, is quoted in percentage points.
The squeeze
Lending rate, policy rate and rents inflation on one axis.
Reading this chart
Why these three series belong together
A residential investment in Jordan is funded at the lending rate and earns its income at something close to the rents series. When the gap between them widens, leveraged residential investment gets harder to underwrite regardless of what happens to capital values.
The lending rate is currently 7.54% against rents inflation of 4.35% — a gap of 3.19 percentage points. Rental growth is not covering the cost of debt, so returns have to come from yield at entry or from capital appreciation, not from income growth.
The rents line shows a point at each of the twice-yearly measurements, joined directly. Compare the dots; the slope between them is interpolation, not monthly data.
E · The availability of capital
The price of money is only half the question. The other half is whether banks are willing to lend against buildings at all.
Bank credit to construction
Outstanding facilities and their year-on-year change.
Construction’s share of all bank credit
Construction as a percentage of total credit facilities.
Jordanian banks have been retreating from construction for four years. Construction peaked at 26.03% of all bank credit in June 2022 and has fallen without interruption to 21.68%. In absolute terms construction lending is still below its June 2022 level, while total bank credit has grown 36% since January 2020 against construction’s 15%. Capital has not left the banking system; it has been reallocated away from building. For a developer, this matters more than the policy rate: it is a change in the willingness to lend, not the price of lending.