RIYADH: Central banks in Gulf Cooperation Council countries cut interest rates by 25 basis points after the US Federal Reserve lowered its benchmark range to 4 percent to 4.25 percent, its first reduction since December.
The Saudi Central Bank, also known as SAMA, reduced its repurchase agreement rate to 4.75 percent and its reverse repo to 4.25 percent. The UAE cut the base rate on overnight deposits from 4.40 percent to 4.15 percent, while Bahrain lowered its overnight deposit rate to 4.75 percent from 5 percent.
With most regional currencies pegged to the US dollar, policymakers across the Gulf mirrored the Fed’s decision.
Vijay Valecha, chief investment officer at Century Financial, said: “Although rate cuts generally reduce returns from traditional investments like fixed deposits, they may encourage gains in the stock market, especially for growth stocks and dividend-paying companies.”
He added: “Dovish expectations have put additional pressure on the US dollar, pushing it below 97. A weaker dollar indirectly supports the UAE’s tourism sector by making travel more affordable for visitors from non-dollar regions. However, businesses in the UAE that rely on imports could face increased costs, as a softer dollar typically raises import prices.”
