Saudi monetary policy - part.1

Over the past two weeks, Saudi Arabia's monetary policy has remained aligned with the U.S. Federal Reserve's stance, reflecting the Kingdom's commitment to maintaining economic stability amid global uncertainties. This alignment is particularly evident in the decision by Gulf Cooperation Council (GCC) central banks, including Saudi Arabia's, to keep interest rates unchanged for the third consecutive period. This move mirrors the Federal Reserve's decision to hold its benchmark rate between 4.25% and 4.5%, indicating a shared approach to addressing economic challenges .

The Saudi Central Bank (SAMA) has been proactive in adjusting its monetary policy to support economic growth. Earlier this year, SAMA reduced its benchmark interest rate to 5%, following the Federal Reserve's rate cut. This decision aimed to maintain monetary stability amid shifting global economic conditions and to support domestic economic activity . Additionally, SAMA's prudent monetary policy has contributed to reassuring monetary conditions, with the banking sector enjoying good liquidity .

The International Monetary Fund (IMF) has commended Saudi Arabia for its economic resilience, citing its expanding non-oil sector, contained inflation, and record-low unemployment. These factors underscore the effectiveness of the Kingdom's monetary policy and structural reforms in fostering economic stability and growth . Looking ahead, SAMA's continued alignment with global monetary trends and its focus on prudent policy measures are expected to support Saudi Arabia's economic objectives and contribute to its ongoing economic transformation.