Today’s opinion columns covered a range of economic, monetary, political and security issues, with a clear focus on the questions facing Jordan at a time when economic pressures are increasingly intertwined with rapidly changing regional dynamics.

The columns examined the cost of interest rates for the Jordanian economy, the limits of the relationship between domestic monetary policy and decisions by the US Federal Reserve, the level of foreign-exchange reserves and confidence in the dinar, as well as the renewal of the governor of the Central Bank of Jordan. Other columns turned to the possibility of regional escalation and its potential consequences for Jordan, as well as developments in the West Bank, which one writer describes as a threat extending beyond the Palestinian territories to Jordan’s national security.

The writers approached these issues from different angles, but a common theme was the question of how much room Jordan has to maneuver in the face of simultaneous economic and geopolitical pressures.

Yousef Mansour: Is Jordan Paying Higher Interest Than Necessary?

In his article, “The Dinar and Interest Rates: Are We Paying More Than Necessary?”, economist and columnist Dr. Yousef Mansour examines interest rates from a perspective that goes beyond the conventional question of whether the Central Bank of Jordan needs to move in tandem with the US Federal Reserve.

Mansour starts from the fundamental fact that the Jordanian dinar has been pegged to the US dollar since 1995, which means that Jordanian monetary policy is closely linked to developments in US monetary policy.

However, the writer argues that this link does not necessarily mean that Jordanian interest rates must move in line with US rates, or that the gap between the two should remain fixed under all circumstances.

He refers to a recent International Monetary Fund study on monetary policy transmission in Jordan which, according to his account, found that the response of Jordanian interest rates to changes in US interest rates was less than one-for-one. This suggests that the Central Bank retains some room to take domestic economic conditions into account when setting monetary policy.

Mansour identifies a number of factors that can determine an appropriate interest-rate level, including inflation, economic growth, the output gap, the level of foreign-exchange reserves, dollarization, domestic liquidity, the current-account position, financial inflows from tourism, remittances and investment, as well as the level of risks facing the economy.

From this point, he introduces the concept of a “justified interest-rate differential”, referring to the gap between dinar and dollar interest rates that Jordan actually needs to maintain exchange-rate stability and confidence in the local currency.

Under this approach, the need for a wide interest-rate differential is not the same under all circumstances. If reserves are high, external inflows are stable, inflation is low and confidence in the dinar is strong, the need to use high interest rates as a defensive tool could be lower than during periods when reserves are declining or pressure on the currency is increasing.

Mansour revisits the experience of the global financial crisis in 2008 and 2009, noting that the Central Bank of Jordan did not move at the same pace as the Federal Reserve at the time, resulting in a wider interest-rate differential in favor of the dinar.

He argues that such a policy can help protect the attractiveness of dinar-denominated assets, limit shifts toward the dollar and support foreign-exchange reserves.

At the same time, however, Mansour points to the direct economic cost of high interest rates.

Higher interest rates increase borrowing costs for companies and households, affect corporate working capital, raise the cost of investment and mortgage financing, and can slow bank credit growth. They can also increase the cost of refinancing public debt when loans or bonds mature and are replaced with new financing.

According to Mansour, maintaining a large differential between Jordanian and US interest rates for an extended period, without a clear economic justification, could turn into an “excess interest premium” ultimately borne by the real economy.

He therefore does not call for cutting interest rates simply for the sake of lowering them. Instead, he proposes a different objective for monetary policy: reaching the “lowest sufficient interest rate” needed to protect the dinar, the exchange rate and foreign reserves.

His argument is based on improvements in several monetary and economic indicators. Foreign reserves reached around $28.4 billion at the end of August, while real growth stood at 2.93% in the first quarter of the year and inflation reached 2.2% during the first eight months.

Mansour therefore argues that the strength of these indicators warrants periodically reassessing the size of the interest-rate differential that is actually necessary, rather than treating it as a fixed figure imposed by the dinar’s peg to the dollar.

Issam Qadamani: The Dinar-Dollar Peg Has Benefits, but It Comes at a Cost

Columnist Issam Qadamani approaches the issue from a different perspective in his article, “A Rising Dollar Means a Rising Dinar,” focusing on the direct effects of the dinar’s link to the US dollar.

Qadamani notes that a stronger dollar automatically translates into a stronger dinar against currencies that weaken against the dollar, because the dinar is pegged to the US currency at a fixed exchange rate.

The writer links the strength of the dollar during the period under discussion to US interest-rate policy, arguing that higher US rates aimed at combating inflation make dollar-denominated assets more attractive and support the US currency in foreign-exchange markets.

For Jordan, this means that the Central Bank does not treat the dollar as an ordinary foreign currency, but rather as the currency to which the dinar is directly linked.

Qadamani therefore argues that maintaining a comfortable interest-rate differential between the dinar and the dollar becomes an important tool for preventing savings and deposits from shifting from the dinar into dollars and for preserving the attractiveness of the local currency.

The writer describes this cost as one of the “taxes” of the dinar’s peg to the dollar, because Jordan cannot treat US monetary policy as though it had no impact on the country.

However, Qadamani does not portray the peg solely as a burden.

According to his analysis, a stronger dollar can reduce the cost of some imports for the Jordanian economy when those imports are priced in other currencies. It can also reduce the dinar value of some debts denominated in currencies other than the dollar.

These benefits, however, do not apply equally to all sectors. Qadamani points out that a stronger dinar resulting from a stronger dollar can make Jordanian exports more expensive in some markets, potentially affecting their competitiveness.

At the domestic level, higher interest rates affect borrowers, both individuals and companies, by increasing the cost of existing variable-rate loans and new borrowing.

Qadamani argues that this cost should be weighed against the cost of inflation, particularly because rising prices reduce household purchasing power and affect the real value of incomes and savings.

His approach therefore presents monetary policy with a trade-off between two costs: the cost of higher interest rates for borrowers and the cost of inflation for consumers and the broader economy.

In his view, maintaining price stability and confidence in the currency remains a fundamental function of monetary policy, even if it requires the economy to absorb higher financing costs during certain periods.

Salameh Al-Daraawi: Renewing the Central Bank Governor’s Term Reinforces Continuity

Columnist Salameh Al-Daraawi turns to the institutional dimension of monetary policy in his article on the renewal of Central Bank of Jordan Governor Dr. Adel Al-Sharkas for another five-year term.

Al-Daraawi interprets the decision as a signal of continuity in monetary policy, particularly because it came around four months before the governor’s current term expires.

The writer argues that continuity in the leadership of the Central Bank provides a degree of stability for financial institutions, banks and investors, because monetary policy operates not only through interest-rate decisions, but also through market expectations and confidence in the continuity of the institutional framework.

Al-Daraawi links his assessment of the Central Bank’s performance in recent years to several indicators, most notably the strength of foreign reserves, stable inflation and the maintenance of the dinar’s exchange-rate stability.

He points to foreign reserves reaching around $28.4 billion at the end of August, while inflation remained at relatively low levels.

The writer argues that these indicators give monetary policy room to address new challenges, as the central bank’s role is no longer limited to maintaining exchange-rate stability.

According to his analysis, the Central Bank is dealing with a range of issues related to banking-sector development, digitalization, financial inclusion, fintech, risk management and banking supervision.

Al-Daraawi points to the National Financial Inclusion Strategy, which aims to raise the percentage of adults holding financial accounts to 65% by the end of 2028, as part of the transformation taking place in the role of monetary policy and the banking sector.

He also highlights financial technology and innovation in payment systems, alongside requirements related to combating money laundering and terrorist financing.

The writer links these issues to Jordan’s removal from the Financial Action Task Force’s grey list in 2023, describing it as an indicator of progress in the country’s anti-money-laundering and counter-terrorist-financing framework.

In Al-Daraawi’s reading, renewing the governor’s term does not necessarily mean that all policies and instruments will remain unchanged. Rather, it means maintaining the core objectives while allowing the tools used to achieve them to change according to economic conditions.

The writer also places monetary independence, accountability and transparency among the elements that should accompany institutional continuity, so that continuity does not become policy rigidity.

Hussein Al-Rawashdeh: The Region Faces the Possibility of Escalation or Prolonged Attrition

On the political front, columnist Hussein Al-Rawashdeh examines the future of the regional landscape in his article, “The Region Awaits the Big Explosion,” from the perspective of the possibility of further escalation.

Al-Rawashdeh argues that the region remains in a state of uncertainty between war and de-escalation, negotiations and political bargaining, and that the continuation of this situation could lead either to prolonged attrition or to a sudden transition toward a broader confrontation.

The writer places Iran, the United States and Israel at the center of the calculations that could determine the next phase, arguing that any decision to move toward a wider confrontation would depend not only on military capabilities but also on domestic and regional political calculations.

Al-Rawashdeh discusses the possibility of strikes against Iran and links this to what he describes as political calculations involving the United States and Israel, as well as Washington’s ability to contain or deter Iran-aligned groups in Lebanon, Yemen and Iraq.

He also argues that the positions of Arab states could play an important role in determining the scale of the consequences of any new confrontation.

The part of the article most directly relevant to Jordan is Al-Rawashdeh’s warning that Arab states could find themselves dealing with the consequences of a war in which they were not direct participants.

If the conflict expands, its repercussions could spread to the economy, energy, trade, transport and security, as well as potentially reshaping regional alliances and political relationships.

The writer argues that dealing with these risks should not wait until the war is over. Instead, he calls, in his analysis, for early Arab dialogue and coordination in dealing with Washington and regional powers.

Al-Rawashdeh fears that Arab states could enter negotiations over postwar arrangements as recipients rather than participants if they fail to build a common Arab position that would allow them to take part in shaping those arrangements.

From this perspective, his article is not focused solely on the possibility of a new confrontation, but also on what could happen politically after any conflict and who would have the ability to influence the shape of the regional order that might emerge from it.

Tariq Al-Naimat: The Risks in the West Bank Extend Beyond Palestinian Territory

Columnist Tariq Al-Naimat examines developments in the West Bank in his article, “Jordan and the Threat of the ‘Erasure Project’ in the West Bank,” focusing on their potential impact on Jordan.

Al-Naimat draws on a report by the Israeli human rights organization B’Tselem titled “The Erasure Project,” which examines, according to the organization, Israeli policies and measures in the West Bank since October 2023.

According to the report cited by the writer, these policies include movement restrictions, settler violence, land confiscation, economic pressure and the weakening of social and political conditions that allow Palestinians to maintain their presence in various parts of the West Bank.

Al-Naimat points to figures included in the report concerning land that has come under Israeli control, as well as Palestinian villages and communities that have been displaced.

He argues that the danger these developments pose to Jordan is not limited to the Palestinian dimension, but is also connected to what these changes could mean for the eastern boundary of the West Bank.

The writer points to discussions within Israeli political and research circles about the future of the Jordan Valley and the border with Jordan. He cites writings and ideas from Israeli researchers and think tanks that view control of the Jordan Valley as a key element of Israel’s security doctrine.

Al-Naimat places these ideas within a broader context involving shifts in Israel’s internal balance of power and the growing influence of right-wing currents and settlers in political and security debates.

He argues that Jordan needs, in his view, to treat these developments as a security and strategic issue rather than simply as another dimension of the Israeli-Palestinian conflict.

The writer proposes a number of measures that he believes could strengthen Jordan’s ability to confront this environment, including diversifying international and regional partnerships, strengthening defense capabilities, developing defense industries, expanding cooperation in the field of unmanned aerial systems, and strengthening the economy and domestic resilience.

These proposals remain the writer’s political and strategic assessment and do not constitute an announcement of official Jordanian policy.