Saudi Arabia raises repo and reverse repo rates by 25 basis points

The Saudi Central Bank (SAMA) has increased both the repurchase agreement (repo) rate and the reverse repurchase agreement (reverse repo) rate by 25 basis points. The new repo rate stands at 450 basis points, up from 425 basis points, while the reverse repo rate has risen to 400 basis points, from 375 basis points. This adjustment is consistent with SAMA's commitment to maintaining monetary stability.

The move follows the US Federal Reserve's decision to raise its benchmark interest rate by 25 basis points, bringing it to a range of 3.75 percent to 4.00 percent. The US central bank made this increase for the first time in more than three years, driven by persistent inflation, particularly due to higher energy prices. The Saudi Central Bank usually mirrors the US Federal Reserve's actions on the riyal, given its peg to the US dollar.

It is important to note that the repo rate is the interest rate at which the central bank lends to commercial banks, while the reverse repo rate is the rate at which banks earn when they deposit money with the central bank.