GCC states â Bahrain, Kuwait and Saudi Arabia â decided to cut their deposit rates from 3.50% to 3.00% today, following the yesterdayâs interest rate cut by the Federal Reserve.
Based on the risk estimations for the economy recession and the recent negative macroeconomic statistics, FOMC cut the rate at its scheduled meeting yesterday from 3.50% to 3.00%. Countries of the Middle East, that peg their national currencies to the U.S. dollar or denominate their foreign reserves in dollars, try to match their interest rates with the one in U.S. to eliminate the difference and the possible carry trade speculations.
Central Bank of Bahrain cut its benchmark interest rate for the one-week deposits, leaving both overnight deposit rate and lending rate unchanged today.
Central Bank of Kuwait has cut the repo rate (deposit interest rate), leaving the lending interest rate at the same level â 5.75%.
Saudi Arabian Monetary Agency has cut only its reverse repo rate, while the repo rate remains at 5.5%.
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