The Central Bank of Bahrain (CBB) announced its decision to cut the overnight deposit interest rate by 25 basis points from 4.75 per cent to 4.50pc, effective today.
This 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.
Earlier, a divided US Federal Reserve cut interest rates by a quarter of a percentage point and announced it will restart limited purchases of Treasury securities after money markets showed signs that liquidity was becoming scarce, a condition the US central bank has pledged to avoid.
The rate cut, which included a nod to the data limits the central bank faces during the current federal government shutdown, drew dissents from two policymakers, with Governor Stephen Miran again calling for a deeper reduction in borrowing costs and Kansas City Fed president Jeffrey Schmid favouring no cut at all given ongoing inflation.
The balance sheet decision will as of December 1 keep the total amount of the Fed’s holdings steady on a month-to-month basis, but shift its portfolio by reinvesting the proceeds of maturing mortgage-backed securities into Treasury bills.
The 10-2 decision to lower the policy rate to a range of 3.75pc-4.00pc was expected by investors as a way for the Fed to temper any further decline in a job market policymakers worry may be losing steam.
Fed chair Jerome Powell was scheduled to hold a Press conference to discuss the results of the meeting and update his views about an economy that policymakers say has been giving off contradictory signals, with a strong run of business investment suggesting underlying strength, but hiring slowing to a crawl.
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