Gulf central banks follow US Fed with rate cuts

Reuters/Kevin Lamarque

Key Gulf central banks lowered interest rates in line with the US Federal Reserve’s benchmark rate reduction by 25 basis points (bps) on Wednesday.

The Central Bank of the UAE reduced the base rate on its overnight deposit facility by 25 bps to 4.4 percent from 4.65 percent, effective from Thursday. 

Saudi Arabia cut repurchase (repo) and reverse repo rates by 25 bps to 5 percent and 4.5 percent, respectively.

Bahrain lowered its overnight deposit rate by 25 bps to 5 percent.

Qatar cut its repo, lending and deposit rates by 30 bps to 4.8 percent, 5.1 percent and 4.6 percent, respectively. 

Oman lowered its repo rate by 25 basis points to 5 percent.

The Central Bank of Kuwait said it ”adopted a gradual and balanced approach in adjusting the discount rate to maintain stability and enhance growth,” noting it cut the discount rate by 25 bps to 4 percent on September 19.

The Fed policymakers revised their outlook for rate cuts next year, indicating only two possible reductions from an estimated four in September.

Speaking at a press conference, Fed chair Jerome Powell said policymakers were slowing their rate reductions as their benchmark rate nears “neutral”, a level that will neither stimulate nor slow the economy.

He admitted that some Fed officials had started to assess the potential effects of president-elect Donald Trump’s policies on the economy and inflation.