Hajj season kicks off with the first group of pilgrims arriving from India    Crown Prince discusses Ukrainian crisis with Zelenskyy over phone    First batch of Pakistani pilgrims leaves for Hajj under Makkah Route initiative    Minister Al-Khateeb welcomes Hyatt Hotels' plan to increase hotel capacity to 5,000 rooms in 5 years    Biden says he will stop sending bombs to Israel if it launches major invasion of Rafah    US House votes to block Greene's effort to oust Speaker Mike Johnson    North Macedonia elects first woman president as center-left crumbles    Croatia's ruling conservatives embrace far-right party in new government    SAUDIA and SAMACO Marine & Powersports partner to provide memorable holiday experiences of the Red Sea    Education minister: 3-semester system is under study    JAX District earns industrial heritage site designation in Saudi Arabia    'The Lab': Fashion Commission launches a pioneering fashion studio in Riyadh    Turki Alalshikh unveils exclusive watch to commemorate 'Ring of Fire' heavyweight title fight    AlUla Academy set to be a hub for tourism vocational training in Saudi Arabia and the region    Al Qadsiah returns to Saudi Pro League    Al Hilal on verge of Saudi League title with thrilling win over Al Ahli    Chinese climbers stuck on cliff for more than an hour due to overcrowding    teamLab Borderless Museum set to open in Jeddah this summer    Saudi Pro League's Allazeez dismisses charges of favoritism in player recruitment    Lord of the Rings cast pay tribute to Bernard Hill, who has died aged 79    JK Rowling in 'arrest me' challenge over hate crime law    Trump's Bible endorsement raises concern in Christian religious circles    Hollywood icon Will Smith shares his profound admiration for Holy Qur'an    We have celebrated Founding Day for three years - but it has been with us for 300    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



SAMA slashes key rate
Published in The Saudi Gazette on 04 - 05 - 2008

Saudi Arabia, which pegs its riyal currency to the dollar, cut its reverse repurchase rate by 25 basis points on Saturday following a US rate cut, but continued a policy of keeping its benchmark lending rate steady.
The Saudi Arabian Monetary Agency (SAMA) cut the reverse repo rate to 2 percent and left the benchmark repurchase rate at 5.5 percent, bankers in Riyadh said, reading from a central bank circular.
The central bank left its benchmark repo rate unchanged and raised banks' reserves requirement with the aim of slowing credit growth, said John Sfakianakis, chief economist at Saudi British Bank.
“Increasing the reserves requirements for banks means that they have to keep more money in their vaults,'' Sfakianakis said by telephone from Riyadh on Saturday. ``So banks have less money to lend, which is an attempt to curb inflation.''
SAMA also raised banks' reserve requirement to 13 percent from 12 percent, the fourth such move since November when this rate stood at 7 percent, in an apparent bid to curb further inflationary pressure amid soaring prices.
SAMA also raised for the first time in years the rate on time savings deposits for customers to 4 percent from 2 percent, the bankers added, encouraging Saudis to keep their funds in banks rather than spend, driving prices higher.
Inflation in the Kingdom jumped to almost 10 percent in March, its highest in almost 30 years. Rising prices are a key challenge across the Gulf Arab region, where several governments peg their currencies to the weakening dollar. – Agencies
which makes it difficult to counter price pressures with tighter monetary policy.
As governments raise wages and subsidies, they also bring in price controls and tighten lending curbs to dampen the impact of price rises on ordinary consumers.
Flush with liquidity from record oil receipts, Saudi Arabia has recently been cutting the reverse repurchase rate instead of the repurchase rate to avoid fuelling further inflation as it tracks the Federal Reserve moves.
The Federal Reserve lowered US interest rates by a quarter percentage point, as expected, and hinted the move could be the last in a series meant to buffer the economy from a credit crunch and housing downturn. The Federal Reserve has slashed rates seven times by a total of 3.25 percent since September. Dollar pegs compel Gulf states to track U.S. moves to maintain the relative value of their currencies against the greenback.
Saudi inflation almost doubled in the six months to March, driven mainly by surging rents and food prices.


Clic here to read the story from its source.