Saturday, Jul 02, 2011
(This item was originally published on Wednesday.)
DUBAI (Zawya Dow Jones)--The Saudi Arabian Monetary Agency, or SAMA, the country's central bank, kept its key interest rates unchanged in July as bank lending to the private sector continued to exhibit modest rates of growth, people familiar with the matter said Wednesday.
SAMA held its overnight reverse repo rate at 0.25%, and the benchmark repurchase rate at 2%, the people said.
Saudi Arabia, which has filled its coffers with surplus income from oil exports this decade, has drawn on its reserves to fund record budgets and keep its $400 billion five-year infrastructure development program on track.
While this spending helped the world's top oil exporter grow in 2010, according to the kingdom's budget released last December, banks have remained hesitant to extend credit. In 2009, the region's top banks were hit badly by lower oil prices, a collapsing real-estate market and deteriorating asset values as the Gulf region suffered its worst economic contraction in almost a decade.
SAMA last cut its overnight reverse repo rate by 25 basis points to 0.25% in June 2009 in an attempt to spur credit growth in the local economy.
Saudi Arabia's annualized rate of inflation slowed to 4.6% in May, from 4.8% in April, data from the Central Department of Statistics & Information showed earlier this month.
Muhammad Al Jasser, SAMA's governor, has repeatedly said that inflationary pressures, caused mainly by an increase in global food prices, are worrying, but the central bank sees no need to change its interest rate policy.
The kingdom earlier this year announced a mega citizen support package, amid spreading regional unrest, which is expected to be partially offset by higher oil prices and output.
-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
02-07-11 0703GMT
