DUBAI - The central banks of Saudi Arabia and the United Arab Emirates cut their key interest rates on Wednesday, following the U.S. Federal Reserve decision to slash rates for the second time this year.
Kuwait's central bank, meanwhile, kept its benchmark rate unchanged at 3%. Its currency, the dinar, is pegged to an undisclosed weighted basket of international currencies, unlike other Gulf countries whose currencies are pegged to the U.S. dollar.
The Saudi Arabian Monetary Authority (SAMA) cut its repo rate, used to lend money to banks, to 250 basis points (bps) from 275 bps, and the reverse repo, the rate at which commercial banks deposit money with the central bank, by the same margin to 200 bps.
Saudi central bank officials had said earlier this week that lower interest rates would help the country's banks because it would boost lending.
The kingdom's economic growth is facing headwinds this year from an OPEC-led output cut. Finance Minister Mohammed al-Jadaan told Reuters on Wednesday that weekend attacks on Aramco oil facilities had "zero" impact on revenue, however.
The UAE central bank also cut rates applied on the issuance of certificates of deposits by 25 bps, effective Sept. 19, and reduced the repo rate for borrowing short-term liquidity by 25 bps.
(Reporting by Saeed Azhar, Nafisa Eltahir and Alexander Cornwell, Editing by Rosalba O'Brien) ((Saeed.Azhar@thomsonreuters.com; +971 44536787; Reuters Messaging: firstname.lastname@example.org))