Monday, Jan 30, 2012
DUBAI (Zawya Dow Jones)--The Saudi central bank has decided to keep its key interest rates unchanged in February, as inflation pressures remain under control, people familiar with the matter said Monday.
The Saudi Arabian Monetary Agency, or SAMA, told the kingdom's banks that it will hold its overnight reverse repo rate at 0.25% next month, and the benchmark repurchase rate at 2%, the people said.
Annual inflation in the kingdom edged up to 5.3% in December, from 5.2% in November, led by a 9.2% annual increase in rent prices, data from the Central Department of Statistics and Information showed earlier this month.
SAMA has repeatedly expressed concern about inflationary pressures, caused mainly by an increase in global food prices. But it has also said it sees no need to change its interest rate policy.
The central bank 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.
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.
But more recently Saudi Arabia has benefited from high oil prices to fund record budget spending and to keep its $400 billion five-year infrastructure development program on track.
-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
30-01-12 1207GMT
