Qatar central bank has no plans to offer govt bonds

Central bank governor happy with impact of new liquidity rules, sees inflation at 1% in 2011
Qatar central bank has no plans to offer govt bonds
The governor of the Central Bank of Qatar, Sheikh Abdullah bin Saud al Thani, said he expected Qatars inflation to reach 1 percent this year
By Reuters
Tue 01 Feb 2011 09:53 PM

Qatar's central bank has no plans to offer more government bonds at the moment and it is happy with the impact of its recent new liquidity measure, Governor Sheikh Abdullah bin Saud al Thani said on Tuesday.

The OPEC member's central bank issued domestic bonds worth $13.7bn last month to absorb liquidity from local banks.

The monetary authority also limited the amount of excess cash banks could earn interest on, which analysts said was aimed at spurring lending in the world's top liquefied natural gas exporter.

When asked whether the central bank planned to issue more government bonds, Sheikh Abdullah said: "No." In answer to a question on whether he was happy with the impact of the new liquidity measures, he said: "Yes, of course."

He declined to comment on interest rates.

In August, Qatar's central bank lowered its overnight deposit rate by 50 basis points to 1.5 percent in the first cut in over two years, a move analysts said was aimed at boosting the non-oil economy and curbing capital inflows.

Qatar needs to keep its interest rates closely aligned with the US benchmarks to avoid excessive pressures on the riyal, which is pegged to the dollar.

Sheikh Abdullah also told reporters on the sidelines of an event that he expected Qatar's inflation to reach 1 percent this year.

The Gulf Arab country's Finance Minister Youssef Kamal said last week the central bank would issue bonds to soak up liquidity in the market if there was a need to control inflation, which he saw between zero and 1 percent in 2011.

Qatar, one of the largest global investors through its sovereign wealth fund, saw protracted deflation in 2010 and 2009 due to the impact of the global financial crisis. Prices are expected to pick up again this year helped by higher food costs.

A Reuters poll forecasts Qatar's inflation will average 3 percent this year after deflation of 2.4 percent in 2010.

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