Wednesday, Dec 28, 2011
CAIRO (Zawya Dow Jones)--The Saudi central bank has decided to keep its key interest rates unchanged in January, as inflation pressures remain under control, people familiar with the matter said Wednesday.
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.
Saudi Arabia's annual rate of inflation was steady at 5.2% in November versus October, while in monthly terms, it rose 0.2%, the lowest rise since February, data from the Central Department of Statistics and Information showed earlier this month.
Muhammad Al Jasser, SAMA's governor, has repeatedly expressed concern about inflationary pressures, caused mainly by an increase in global food prices. But he has also said that the central bank saw no need to change its interest rate policy.
In October, Al Jasser said that inflation is likely to drop back below 5% by the end of this year as international food prices stabilise and the cost of housing in the kingdom eases.
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.
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
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28-12-11 1157GMT
