São Paulo – Central banks in Arab countries across the Gulf and elsewhere announced interest rate cuts this Monday (16), after the US Federal Reserve (Fed) made its widest benchmark rate slash since the financial crisis of 2008.
The Gulf’s leading media outlets broke the news. Countries whose rates were cut include the UAE, Kuwait, Saudi Arabia, Qatar and Bahrain, in the Gulf, and Egypt, in Africa. Some, including the UAE, also cut interest on a number of operations, including overnight rates.
Central banks employ interest rate cuts to fuel national economies, since at least theoretically speaking, lower rates mean cheaper and more abundant cash going around. The ongoing rate cut is intended to ensure liquidity as the world attempts to shun recession as a result of coronavirus.
The Central Bank of the UAE lowered its rate by 0.75 percentage point, The National reported. The US slashed its rate by 1 point to a 0%-to-0.25% range. The move was a concerted effort with other central banks in the UK, Japan, Canada, Switzerland and other countries.
It was expected to help keep stock markets afloat this Monday, but this wasn’t the case. In the UAE, Dubai’s main stock index dropped 6.1%, while Abu Dhabi’s lost 7.8% prior to the announcement of the UAE’s interest rate cut, and after the administration announced stimulus measures.
Translated by Gabriel Pomerancblum
