The economy's high level of dollarisation and the currency's peg to the US dollar mean that Lebanese pound interest rates tend to track US rates, but with a strong positive differential, reflecting perceptions of higher political risk and the sovereign's heavy indebtedness. The BdL aims to keep deposit rates stable in the near term in order to ensure adequate liquidity, but rates could begin to rise once monetary tightening resumes in the US in 2012. The premium of pound deposit rates over equivalent dollar rates will continue to support inflows and an ongoing de-dollarisation of deposits.

Heavy government borrowing and limited price-competition suggest that commercial banks' prime rates will remain prohibitively expensive for many small enterprises, although the BdL has reduced reserve requirements for some types of local-currency loans to stimulate lending to priority sectors.