The Central Bank of the UAE (CBUAE) has decided to cut the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25 basis points, from 4.40% to 4.15%, effective from September 18.
Saudi Arabia cut its repurchase agreement (repo) rate by 25 basis points to 4.75% and its reverse repo rate also by 25 bps to 4.25%.
Qatar's central bank reduced its deposit rate by 25 bps to 4.35%, its lending rate by 25 bps to 4.85% and its repo rate by 25 bps to 4.60%.
Bahrain's central bank also cut its overnight deposit rate by 25 bps to 4.75% from 5%, effective Thursday.
Kuwait cut its discount rate by 25 basis points to 3.75% from 4%.
It may be noted that the US Federal Reserve on Wednesday lowered interest rates by a quarter of a percentage point as officials signaled two more cuts could follow this year in light of rising risks confronting the labor market.
The decision to lower borrowing costs for the first time since December shifts interest rates to a range of 4% to 4.25%. The decision was not unanimously supported, the second straight meeting that featured at least one dissent from a member of the Board of Governors.
The decision to cut rates marks a turning point for the central bank, whose officials have been locked in an intense debate about the right time to provide some relief to borrowers when its goals of low, stable inflation and a healthy labor market are in tension with each other.
Inflation picked back up over the summer and appears poised to continue accelerating this year as a result of Trump’s tariffs. The labor market, while still solid, has started to flash more ominous signs.
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