RIYADH: Saudi Arabia’s central bank dropped its benchmark interest rate to 5%, the third reduction this year, in line with the US Federal Reserve’s move to cut rates by 25 basis points.
The institution, generally known as SAMA, reduced its repurchase agreement rate to 5% and reverse repurchase agreement rate to 4.5 percent, according to a statement. The move is intended to maintain monetary stability amidst changing global economic conditions.
The move is consistent with the US Federal Reserve’s decision to decrease rates by 25 basis points, bringing the target range to between 4.25 percent and 4.5 percent.
“This decision is in line with SAMA’s mandate of preserving monetary stability in the context of global developments,” the organization stated.
The drop follows a more dramatic 50-basis-point cut in September and signals a shift in policy as inflationary pressures weaken. The decision is likely to reduce borrowing costs, offering relief after two years of high interest rates aimed to control inflation.The UAE reduced its overnight deposit facility rate by 25 basis points to 4.4 percent, while Oman lowered its repo rate by the same amount to 5 percent. Qatar chose a slightly deeper drop, lowering its three major rates by 30 basis points. Bahrain cut its overnight deposit rate by 25 basis points to 5%.
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