Saudi Central Bank lowers interest rates by 50 basis points

The Saudi Central Bank (SAMA) has reduced its key interest rates by 50 basis points, bringing the repurchase agreement (repo) rate down to 5.50 percent and the reverse repurchase agreement (reverse repo) rate to 5.00 percent.

The bank stated that the move is in line with the central bank’s aim to maintain monetary stability in the Kingdom.

The decision follows the US Federal Reserve’s rate cut of 50 basis points, which marked the first reduction since 2020, placing its rate between 4.75 percent and 5 percent.

The US Fed’s move is expected to be followed by another similar cut before the end of 2024. Gulf central banks, including those in the UAE, Bahrain, Qatar, and Kuwait, also adjusted their rates in response to the Fed’s action.

While the Federal Open Market Committee (FOMC) noted signs of continued economic expansion, it highlighted a slowdown in job gains and a slight rise in unemployment. Inflation remains elevated but is showing progress toward the Fed’s 2 percent target.

The Fed’s statement reflected confidence in inflation trends but acknowledged uncertainties in the broader economic outlook. Governor Michelle Bowman, however, advocated for a more modest quarter-point cut, signaling differences in views within the Fed ahead of the upcoming US elections.