The Central Bank of Bahrain (CBB) has announced its decision to cut the overnight deposit rate by 25 basis points from 5 per cent to 4.75pc, effective today.
The decision comes as part of the measures taken by CBB in maintaining monetary and financial stability in Bahrain in light of global financial market developments.
Meanwhile, the Federal Reserve cut interest rates by a quarter of a percentage point and indicated it will steadily lower borrowing costs for the rest of this year, as policymakers responded to concerns about weakness in the job market in a move that won support from most of President Donald Trump’s central bank appointees.
Only new Governor Stephen Miran, who joined the Fed on Tuesday and is on leave as the head of the White House’s Council of Economic Advisers, dissented in favour of a half-percentage-point cut.
The rate cut, along with projections showing that two more quarter-percentage-point reductions are anticipated at the remaining two policy meetings this year, indicates Fed officials have begun to downplay the risk that the administration’s voluble trade policies will stoke persistent inflation, and are now more concerned about weakening growth and the likelihood of rising unemployment.
The cut, the first move by the policy-setting Federal Open Market Committee since December, lowered the policy rate to the 4.00pc-4.25pc range.
“The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen,” the central bank’s rate-setting Federal Open Market Committee said in its policy statement. “Job gains have slowed, and the unemployment rate has edged up.”
In a Press conference after the conclusion of the Fed meeting, Chair Jerome Powell said “in the near term, risks to inflation are tilted to the upside and risk to employment to the downside, a challenging situation” for monetary policymakers.
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