Three Gulf states cut rates to defend dollar peg

Three Gulf Arab oil producers lowered some interest rates on Wednesday to defend their dollar-pegged currencies after a US rate cut despite the risk of stoking already near-record inflation.

Saudi Arabia and Bahrain, the largest and smallest economies in the world’s biggest oil-exporting region, cut deposit rates by 75 basis points to 2.25 percent , matching a reduction by the Federal Reserve.

They left lending rates steady as they try not to fuel money supply growth, while the United Arab Emirates, the second-largest Arab economy, cut its repurchase rate -- the rate at which banks borrow from the central bank -- to 2.25 percent. Reuters