Gulf central banks mirror US Fed interest rate cut

Most Gulf central banks lowered their key interest rates after the US Federal Reserve cut its benchmark rate by 25 basis points (bps) on Thursday.

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

Saudi Arabia cut repurchase (repo) and reverse repo rates each by 25 bps to 5.25 percent and 4.75 percent, respectively.

Bahrain lowered its overnight deposit rate by 50 bps to 5.5 percent.

On the other hand, Qatar cut its repo, lending and deposit rates by 55 bps to 5.45 percent, 5.7 percent and 5.2 percent, respectively. 

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Speaking at a press conference, Fed chair Jerome Powell said that the decision to cut rates by 25 bps reflects policymakers’ awareness that reducing rates too quickly could hinder progress on inflation, while moving too slowly could unnecessarily dampen economic activity and employment.

In September, the US Fed lowered the benchmark interest rate by 50 bps to a range of 4.75 to 5 percent, the first rate cut in four years.