Oman central bank not to follow Fed’s rate decision

MUSCAT / Reuters

Oman’s central bank won’t automatically imitate last week’s interest rate hike by the US Federal Reserve, central bank executive president Hamood Sangour Al Zadjali said on Sunday.
Oman is the only member of the six-nation Gulf Cooperation Council not to announce an official interest rate rise in the wake of the Fed’s 0.25 percentage point increase. The Omani central bank will monitor interest rates offered by local banks and will not “blindly follow the Federal Reserve’s decision”, Zadjali said.
“Even though the Omani rial is pegged to the U.S. dollar, the economic cycle in the U.S. is different from the local economic cycle.”
Zadjali added, “Oman has its independent policies with regards to this issue. The situation needs to be deeply and carefully studied before any decisions, keeping the national economy’s interest in mind.”
The central bank’s overnight repurchase rate, which is determined by a formula based on the London interbank offered rate, has been edging up in the last few months from the 1.00 percent level where it was for years. The rate hit 1.195 percent last week. Zadjali said early this month that he did not want to see Omani commercial banks’ loan and deposit rates rise, but that increases might eventually become inevitable because of U.S. monetary policy and tightening liquidity in Oman’s banking system.