Muscat – The Central Bank of Oman (CBO) on Thursday reduced its repo rate for local banks by 50 basis points, bringing it down to 5.50% from 6.00%.

Oman’s rate cut decision followed the US Federal Reserve’s move on Wednesday to lower its key interest rate by 50 basis points, marking the first rate cut in more than four years.

Oman’ economy operates under a fixed exchange-rate regime, which means its interest rates are closely aligned with US rates. As a result, the CBO’s repo rate typically moves in tandem with the Federal Reserve’s policy rate.

The repo rate is the policy rate that allows commercial banks to borrow short-term liquidity from the CBO as the lender of last resort.

“The Central Bank of Oman’s monetary policy objective is to sustain and maintain its fixed exchange rate. This policy is aligned with the structure and nature of the Omani economy,” the CBO said in a statement released on Thursday.

The US Federal Reserve announced its long-anticipated interest rate cut on Wednesday, reducing the benchmark rate by 50 basis points. This lowered the rate from its highest level in 23 years, as the US central bank sought to ease borrowing costs following progress in the fight against inflation.

The Fed’s first interest rate cut since March 2020 brings the benchmark federal funds rate to a range of 4.75% to 5%.

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