The Saudi Central Bank (SAMA) has lowered its key interest rates by 50 basis points. The repurchase agreement (repo) rate is now at 5.50 percent, and the reverse repurchase agreement (reverse repo) rate stands at 5.00 percent.
This adjustment aligns with SAMA’s goal of maintaining monetary stability in Saudi Arabia.
The move follows the US Federal Reserve’s recent rate cut of 50 basis points, its first reduction since 2020, setting its rate between 4.75 percent and 5 percent.
Another similar cut from the US Fed is anticipated before the end of 2024. Gulf central banks in the UAE, Bahrain, Qatar, and Kuwait have also adjusted their rates in response.
The Federal Open Market Committee (FOMC) noted ongoing economic expansion but pointed out a slowdown in job gains and a slight rise in unemployment. Despite elevated inflation, progress toward the Fed’s 2 percent target is evident.
While the Fed is confident about inflation trends, uncertainties in the economic outlook remain. Governor Michelle Bowman suggested a more modest quarter-point cut, indicating differing views within the Fed ahead of the US elections.