In a statement on 3 November, the CBI said it had cut the rate to counter the effect of an increase in Iraq’s inflation, which saw a 5.4 per cent rise in the consumer price index from 31 July to 30 September.

The bank says it hopes to stimulate inter-bank and personal lending to protect the country’s economy from the worst effects of the global financial crisis.

“The Iraqi central bank reaffirms the importance of boosting bank credit activity to support real growth in Iraq,” it said.

The last such cut in interest rates occurred in July, when the CBI lowered the rate to 16 per cent from 17.5 per cent.