Central Bank governor feels oil price has restored confidence in the region
Bahrain’s interest rate is currently “suitable,” the governor of the kingdom’s Central Bank, Rasheed al Maraj, said in Morocco.
In an interview today at the World Economic Forum in Marrakesh, al Maraj said: “Our primary objective is to set our interest rate to suit our economic activities; we have cut interest rates dramatically over the past two years as a result of the downturn in the global economy.”
He added: “I think we have reached a level now where we think our interest rates are suitable.”
The Central Bank last cut its key interest rate by a quarter of a percentage point to 0.5 percent on September 15, 2009, as lower oil prices then slowed economic growth.
Growth in Bahrain will accelerate as much as 4.5 percent this year from 3 percent last year, Sheikh Mohammed bin Essa al Khalifa, chief executive officer of Bahrain’s Economic Development Board, told a conference in Manama October 4.
Inflation slowed in September to 2 percent from 2.4 percent in the previous month, according to the state statistics agency.
Al Maraj said: “The issue of quantitative easing is primarily an issue for the US; if you think the economy will grow at a higher rate then it’s good for us.”
He added: “What matters to us is that the US economy gets fixed.”
The dollar dropped to a 15 year low yesterday versus the yen after a Group of 20 pledge to avoid “competitive devaluation” failed to dispel concern that the Federal Reserve will weaken the US currency by announcing more bond purchases.
The greenback slid against most of its major counterparts as investors added to bets that a boost in quantitative easing will support higher returning assets.
Sterling fell to the lowest level against the yen since February 2009 as declining mortgage approvals in the UK spurred speculation that the Bank of England will buy more debt.
The price of oil “has restored confidence” in the region, al Maraj said.
Crude oil for December delivery fell 6 cents to $82.46 a barrel at 10:37 am on the New York Mercantile Exchange.
Futures are up 4.8 percent from a year ago. Brent crude oil for December settlement dropped 6 cents to $83.48 a barrel on the London based ICE Futures Europe exchange.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.