Muscat: The Central Bank of Oman has increased the interest rate on repurchase operations for local banks by the same amount approved by the US Federal Reserve, which is 25 basis points, to 6 percent, from Thursday.
The statement issued by the bank indicated that this comes in line with the monetary policy of the Central Bank of Oman, which aims to maintain the fixed exchange rate system for the Omani riyal and with the structure and nature of the Omani economy.
The global economy is witnessing an increasing and continuous rise in inflation rates, so central banks in a number of countries seek to deal with this rise by raising their interest rates to reduce the lending rate and reduce, assuming, total demand, which may translate into lower consumption rates. While higher interest rates are expected to lower inflation, they may also increase savings, particularly by higher income earners.
In light of these prevailing conditions in global markets, interest rates were raised by central banks in countries whose monetary policy is based on fixed exchange rate regimes and in a number of other countries that are witnessing a similar rise in inflation rates.
Oman Observer is now on the WhatsApp channel. Click here
