Gulf Central Banks Follow Fed's Lead with Key Rate Cuts

Gulf central banks have reduced key interest rates following the U.S. Federal Reserve's quarter-point cut. With regional currencies pegged to the dollar, nations like Saudi Arabia and the UAE anticipate economic growth and diversification from this move. Kuwait held steady, aligning with local conditions.

In a significant move following the U.S. Federal Reserve's quarter-point cut, several Gulf central banks reduced their key interest rates on Wednesday. This marks the second rate cut decision this year from the Fed.

Saudi Arabia reduced its repo and reverse repo rates by 25 basis points, while the United Arab Emirates lowered its overnight deposit facility rate to 3.9%. These steps are crucial for the Gulf region, which is looking to bolster economic activity through lower rates, fostering non-oil sector growth.

Notably, the central banks of Qatar, Bahrain, and Oman also followed this trend, cutting their rates by 25 basis points. However, Kuwait opted to maintain its current rates, citing consistency with its local economic conditions, which are vital for its currency basket that includes the U.S. dollar.

(With inputs from agencies.)