Muscat – The Central Bank of Oman (CBO) on Thursday increased its interest rate by 25 basis points to 6 per cent on repurchase operations for local banks.

The Central Bank of Oman’s monetary policy target is to sustain and maintain its fixed exchange rate. This policy is aligned with the structure and nature of the Omani economy.

There are a number of advantages for the Sultanate of Oman that are derived from this policy among which are the stability of the Omani Rial, mitigation of capital outflow and promoting certainty among investors by removing exchange rate risk.

The global economy has witnessed rising and sustained inflationary pressure and central banks around the world are attempting to address this pressure by hiking interest rates.

‘While higher interest rates are expected to lead to lower inflation, in some cases, as related to consumers in high-income brackets, they could result in higher savings,’ the CBO noted.

Therefore, and in light of such conditions dominating the global market, key policy interest rates were also hiked by central banks in countries that anchor their monetary policy on fixed exchange rate regimes and in a number of other countries that are experiencing similar inflationary pressure.

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