Interest rate cuts will be a driver for growth of economic activities, which will lead to an expansionary fiscal policy, Ahmed Alkholifey, governor of the Saudi Arabian Monetary Authority (SAMA) said on Tuesday.
“We are monitoring global interest rates,” Alkholifey said in response to a question by Argaam during a press conference, adding, “If interest rates are lowered, this will be an impetus for growth in the economy.”
Interest rates may be cut and they may also increase by 25-50 basis points (bps), he added.
The monetary policy committee will likely hold a meeting today to map out the central bank’s strategy in the near term.
“We don’t expect the market to see tight money; we usually fully tackle any negative impact on the Saudi economy,” Alkholifey noted.
With its stockpile of net foreign assets at $507 billion, “it gives the monetary authority the ability to intervene in the markets at any time,” Alkholifey indicated. The top OPEC oil producer has no intention to change its currency’s peg to the U.S. dollar, he said.
As for payment options, Sadad and Mada, Alkholifey added that they will be affiliated to the Saudi Central Bank in the first phase of privatization, noting that going public is an option to be considered after a while.
On the other hand, Alkholifey told Reuters it was too early to assess the impact of the attacks on the economy. Still, he said the central bank’s forecasts “are not far away” from the International Monetary Fund’s outlook.
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