UAE, Saudi, Bahrain cut interest rates following Fed
Central banks in Saudi Arabia, the United Arab Emirates and Bahrain cut their benchmark interest rates on Wednesday by 25 basis points following a similar decision by the Fed. Kuwait kept its discount rate unchanged at 3%.
"Monetary easing, although small, is timely and will give the region's economies a helpful boost as growth has yet to recover from the 2014 oil price decline," Ziad Daoud, chief Middle East economist at Bloomberg Economics, said in a report before the announcement. Gulf central banks largely move in lockstep with the US to protect their currencies' peg to the dollar.
Saudi Arabian Monetary Authority lowered its repo rate from 300 bps to 275 bps, and its reverse repo rate from 250 bps to 225 bps with an "objective of preserving monetary stability", it said in a statement on its web site.
The Central Bank of Bahrain also slashed the interest rate on its one-week deposit facility to 2.5% from 2.75%. It also reduced the overnight deposit rate to 2.25% from 2.5%; the one-month deposit rate to 2.85% from 3.1% and its lending rate to 4.25% from 4.5%.