Muscat - The Central Bank of Oman (CBO) announced a 25-basis-point reduction in its repo rate, bringing it down to 5.25% from 5.50%. This change aligns with a similar move by the US Federal Reserve.
The repo rate is the policy rate that enables commercial banks in Oman to borrow short-term liquidity from the CBO. The decision took effect immediately.
The CBO's adjustment follows the US Federal Reserve's decision to cut its benchmark interest rate by 25 basis points, reducing the federal funds rate to a range of 4.5% to 4.75%, the lowest level since February 2023. Oman, alongside other Gulf Cooperation Council (GCC) countries, typically aligns its monetary policy with that of the US, as their currencies are pegged to the US dollar.
In response to the Fed's decision, all GCC central banks, except Kuwait, announced rate cuts. Saudi Arabia reduced its repo and reverse repo rates by 25 basis points to 5.25% and 4.75%, respectively. The Central Bank of the UAE cut its base rate on the overnight deposit facility by 25 basis points to 4.65%. Qatar's central bank opted for a 30-basis-point reduction across its main interest rates, while Bahrain's central bank implemented a 25-basis-point cut in its overnight deposit rate.
The Federal Reserve's recent cut follows a more aggressive 50-basis-point reduction in September, indicating a cautious approach as it assesses the economic landscape and inflation trends. Federal Reserve Chairman Jerome Powell emphasized the importance of a data-driven approach, leaving the possibility open for future rate adjustments based on changing economic conditions.