Riyadh – Gulf banks joined the US Federal Reserve on Thursday evening and reduced interest rates on deposits and loans by varying percentages.
On Thursday evening, the US Federal Reserve lowered federal funds interest rates by 25 basis points, in a decision that was the second in a row, after another by 50 basis points last September.
The Federal Reserve said in a statement that the Open Market Committee decided to reduce interest rates by 25 basis points to settle at a range of 4.5-4.75 percent.
The UAE Central Bank said, in a statement, that it reduced interest rates on overnight deposit facilities by 25 basis points to 4.65 percent.
While the Qatar Central Bank announced, in a statement, a reduction in lending interest rates by 30 basis points to 5.4 percent.
On the other hand, the Central Bank of Bahrain announced a reduction in the interest rate on overnight deposits by 25 basis points to 5.25 percent, starting from November 10.
While the Saudi Central Bank said, in a statement, that in view of global developments, the bank decided to reduce the rate of the repurchase agreement (repo) by 25 basis points to 5.25 percent, and to reduce the rate of the reverse repurchase agreement (repo) by 25 basis points to 4.75 percent.
The Central Bank of Kuwait kept interest rates unchanged at 4 percent, saying in a statement that its current assessment of the local economic and financial data and information available to it reflects the continued soundness and robustness of the monetary and financial stability conditions in the State of Kuwait.
While no decision was issued by the Central Bank of Oman until (19:40 GMT).
Anatolia
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**Interview with Economic Analyst Sarah Al-Farouq on Gulf Central Banks’ Interest Rate Cuts**
**Editor:** Good afternoon, Sarah. Thank you for joining us. In light of the recent decision by the US Federal Reserve to cut interest rates by half a percentage point, Gulf central banks have followed suit. What are your thoughts on this move?
**Sarah:** Good afternoon! Yes, this is a significant development. The decision by the Federal Reserve usually has a ripple effect globally, especially in the Gulf Cooperation Council (GCC) countries, where many currencies are pegged to the US dollar. A rate cut can encourage borrowing and spending, which is essential given the current economic challenges.
**Editor:** Right. Can you elaborate on why the GCC countries decided to mirror the Fed’s action?
**Sarah:** Certainly. Maintaining interest rates in alignment with the US helps stabilize their economies. By lowering rates, Gulf central banks aim to stimulate economic activity, support businesses, and address liquidity concerns. This is particularly crucial as many Gulf economies are diversifying away from oil dependency and require robust growth in other sectors.
**Editor:** That’s a good point. What potential impacts do you foresee from these rate cuts on consumers and businesses in the Gulf region?
**Sarah:** For consumers, lower interest rates can lead to cheaper loans and mortgages, making it easier to finance homes or cars. For businesses, the cost of borrowing decreases, which could incentivize investments in growth, expansion, and innovation. However, it’s essential to monitor inflation as well, as too much liquidity in the market can also lead to price increases.
**Editor:** Speaking of economic stability, how do you think these changes will affect the overall economic outlook for the region in the coming months?
**Sarah:** In the short term, I expect a boost in consumer spending and business investments, which could foster economic growth. However, the long-term impact will depend on global economic conditions, oil prices, and how effectively GCC countries can diversify their economies. Continuous monitoring and adjustments will be key to maintaining stability.
**Editor:** Thank you, Sarah, for your insights. It will be interesting to see how these developments unfold in the coming months.
**Sarah:** Thank you for having me!
