The Saudi central bank has decided to keep its key interest rates unchanged in March, as inflation pressures remain under control, people familiar with the matter said Sunday. Saudi Arabian Monetary Agency (SAMA) told the Kingdom's banks that it will hold its overnight reverse repo rate at 0.25 percent next month, and the benchmark repurchase rate at 2 percent, sources said. Annual inflation in the Kingdom remained unchanged at 5.3 percent in January versus December, data from the Central Department of Statistics and Information showed earlier this month. Inflation in the Kingdom is expected to moderate to an annual average of 4.4 percent in 2012, Jadwa Investment said in a recent note. Negligible external price pressures, due to lower commodity prices, a strong dollar and subdued inflation in trading partners, will underpin the decline, it said. SAMA has repeatedly expressed concern about inflationary pressures, caused mainly by an increase in global food prices. But it has also said that the central bank saw 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 percent 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. Meanwhile, Saudi Arabia's M3 money supply growth accelerated to 13.6 percent year-on-year at the end of January from 13.3 per cent in the previous month, central bank data showed Sunday. The Kingdom's bank lending to the private sector rose 11.7 percent in January, its fastest growth rate since May 2009, and up from 10.6 percent in December 2011. The central bank's net foreign assets reached a record high of SR2 trillion ($541.3 billion), the data also showed.
