RIYADH: Gulf Cooperation Council central banks have held interest rates steady for the sixth time as the US Federal Reserve keeps its benchmark level between 5.25 percent and 5.50 percent.    

As most currencies in the region are pegged to the US dollar, monetary policy follows the decisions taken in Washington, with policymakers opting to lock the rate at the level it has been since July.  

The freeze comes as the rate-setting panel cites “a lack of further progress toward the committee’s 2 percent inflation objective.”   

Vijay Valecha, chief investment officer at Century Financial, told Arab News: “This decision marks the sixth consecutive time that the central bank has chosen to keep rates unchanged. Market expectations have adjusted, now forecasting only one rate cut by year-end compared to the six anticipated at the beginning of 2024.”  

He added: “The monetary policies of most central banks in the GCC countries, including the UAE, Saudi Arabia, Bahrain, Oman, and Qatar, typically mirror those of the Fed due to their currencies being pegged to the US dollar. Kuwait is the exception in the bloc, as its dinar is linked to a basket of currencies.”  

Valecha continued by stating that as a result, interest rates in GCC markets are also anticipated to remain stable in the near future, which bodes well for the profitability of GCC banks. 

This decision implies that the Saudi Central Bank, also known as SAMA, will maintain its repo rates at the current level of 6 percent.    

The UAE central bank, along with Kuwait, Qatar, Oman, and Bahrain, also mirrored the Fed’s move. 

Repo rates, which represent a form of short-term borrowing primarily involving government securities, underscore the close economic ties and financial dynamics between the GCC countries and the global economic landscape, particularly the US.          

The US central bank also stated that it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”  

This indicates that rate cuts are not on the cards anytime soon, until inflation cools down and moves sustainably toward the 2 percent target set by the US Fed.

RIYADH: Saudi Arabia is open to providing up to 75 percent of financing for certain industrial projects, a minister has revealed in a bid to incentivize foreign investment and private sector players.

During his discussion with several Qatari investors on the sidelines of the 52nd meeting of the Gulf Cooperation Council Industrial Cooperation Committee in Doha, Bandar Alkhorayef, the Kingdom’s minister of industry and mineral resources, highlighted the vast opportunities that Saudi Arabia’s untapped mining potential provides to global investors. 

According to a release on X, he reaffirmed that in addition to the incentives provided by the industrial and mineral wealth system and the multiple sources of financing, the prepared infrastructure in more than 36 industrial cities around the Kingdom offers a sum of qualitative capabilities such as the production of prefabricated factories and long-term rentals.

Alkhorayef further lauded the private sector as the real engine for the Kingdom’s industrial development, noting that the National Strategy for Industry was initially built in partnership with the private sector.

This stems from the nation’s belief in the importance of private sector players and their ability to create promising opportunities in various fields, the release added. 

In another boost to the industrial sector in the GCC, the minister headed the Kingdom’s delegation to the industrial committee meetings in Doha. The panel discussed a number of initiatives proposed by Saudi Arabia, including the Gulf Industrial Excellence Award.

In addition, the meeting reviewed the Arab industrial integration strategy and attempts to unify the support provided to the industrial sector in GCC countries, aiming to achieve economic growth and overcome challenges and obstacles faced in the industry. 

Furthermore, developments in finding a unified definition for the Gulf national product and its proposed standards were discussed. 

The meeting also stressed the importance of supporting the industrial sector in the GCC countries and integrating the roles of respective nations to aid in developing their respective national industries.