SAMA Keeps Repo Rate Fixed at 4.25% in Its Latest Meeting

The Saudi Arabian Monetary Authority (SAMA) maintained its main repo rate at 4.25%, in a decision aligned with the directions of the US Federal Reserve, which links Saudi monetary policy to the dollar.

This decision is consistent with the decades-long peg of the Saudi riyal to the US dollar, as SAMA almost automatically follows the Federal Reserve's decisions to raise, cut, or hold interest rates.

SAMA is keen to employ these tools to ensure the stability of the banking sector and support economic growth, while maintaining competitiveness and attracting foreign investments to the Kingdom.

Holding interest rates steady is seen as a positive signal for the real estate sector and the private sector, as it provides stable borrowing costs that help businesses and individuals with long-term financial planning.

What do these terms mean?

Repo Rate (Repo): The interest rate at which SAMA lends money to commercial banks in the short term, serving as the main tool to influence interest rate levels in the economy.

Federal Reserve: The central bank of the United States of America, whose decisions on interest rates affect dollar-linked economies such as Saudi Arabia.

Currency Peg: A policy adopted by countries to link their currency to another currency at a fixed exchange rate. The Kingdom of Saudi Arabia has pegged its riyal to the dollar since 1986.