CAIRO  - Gulf central banks cut key interest ‍rates by ‍25 basis points on Wednesday, mirroring a ​move by the U.S. Federal Reserve to reduce rates by a ⁠quarter of a percentage point in another divided vote.

The Fed signalled it ⁠will likely ‌pause further reductions in borrowing costs with new projections indicating the median policymaker view of just one ⁠quarter-percentage-point cut in 2026, the same outlook as in September. 

The oil and gas exporters of the Gulf Cooperation Council generally follow the Fed's lead on interest rate ⁠moves as most regional currencies ​are pegged to the dollar. Only the Kuwaiti dinar is pegged to a ‍basket of currencies, which includes the dollar.

Saudi Arabia, the region's biggest economy, ​cut its repurchase agreement (repo) rate by 25 bps to 4.25% and its reverse repo rate to 3.75%. The United Arab Emirates' central bank reduced the base rate applied to its overnight deposit facility to 3.65%, effective Thursday.

Gulf economies are all at varying stages of diversifying their economies away from hydrocarbons and develop non-oil sectors like real estate, tourism and manufacturing, which require billions ⁠in financing and investment.

Lower rates are ‌expected to stimulate economic activity and bolster non-oil growth.

The central banks of Qatar, Bahrain, Kuwait and Oman also reduced ‌key rates ⁠by 25 basis points.

(Reporting by Yomna Ehab and Jaidaa Taha; ⁠Writing by Rachna Uppal; Editing by Nick Zieminski)