The United States Federal Reserve voted to cut interest rates by half a percentage point, which prompted the GCC central banks to slash interest rates.
After hiking it 11 times in 16 months and then holding it steady for more than a year, the Federal Reserve cut its benchmark interest rate by 50 basis points, putting rates at a range of 4.75% to 5%.
The Fed has hinted that there will be more cuts in the future. This action is anticipated to be the first in a planned series of rate reductions until 2025. Following the Fed’s announcement, the UAE Central Bank (CBUAE) announced that the base rate applicable to the Overnight Deposit Facility (ODF) will be reduced by 50 basis points, from 5% to 4%.
It has also chosen to keep all standing credit facilities’ interest rates at 50 basis points above the Base Rate when borrowing short-term liquidity from the CBUAE.
The Saudi Central Bank announced that it has chosen to lower the reverse repo rate by 50 basis points to 5% and the repo rate by 50 basis points to 5%.
The Central Bank of Qatar lowered key interest rates by fifty-five basis points. The central bank released a statement lowering the lending interest rate to 5.70%, the deposit interest rate to 5.20%, and the repo rate to 5.45%.
Additionally, the Central Bank of Bahrain (CBB) announced that it would be reducing the overnight deposit rate by 50 basis points, from 6.00% to 5.50%.
“This decision comes as part of the measures taken by CBB in maintaining monetary and financial stability in the Kingdom of Bahrain in light of global financial market developments,” the apex bank said in a statement.
The discount rate will drop from 4.25% to 4%, effective September 19, and there will be a 25 basis point reduction from 4.25%.
As of July 2024, the annual rate of inflation in Kuwait has decreased from 4.71% in April 2022 to 3%, according to Basel Al-Haroon, the Governor of the Central Bank of Kuwait.