The Central Bank of Bahrain (CBB) has announced its decision to cut the overnight deposit interest rate by 25 basis points from 4.5% to 4%, reported BNA.

The decision is part of CBB’s measures to maintain monetary and financial stability in the Kingdom of Bahrain in light of developments in international financial markets, it stated citing the kingdom's central bank.

The CBB move comes following the decision of US Federal Reserve to lower the interest rates for a third time this year.

The Fed said on Wednesday afternoon that it was lowering the target for its key lending rate by 0.25 percentage points, putting it in a range of 3.50% to 3.75% - its lowest level in three years.

Along with CBB, all the central banks in GCC cut interest rates by 25 basis points. 

The Saudi Central Bank (SAMA) cut the reverse repurchase agreement (reverse repo) rate by 25 basis points (bps) from 400 to 375 bps. The central bank also lowered the repurchase agreement (repo) rate by 25 bps from 450 to 425 bps.

The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of monetary policy and provides an effective floor for overnight money market interest rates in the UAE, its stated.

With most regional currencies pegged to the US dollar, policymakers across the Gulf mirrored the Fed’s decision. 

The US Fed move comes, even as internal divisions create uncertainty about additional cuts in the coming months, reported BBC. 

Fed chair Jerome Powell said central bankers needed time to see how the Fed's three cuts this year work their way through the US economy. Policymakers will examine incoming data closely ahead of the Fed's next meeting in January, he stated.

"We are well-positioned to wait to see how the economy evolves," Powell told reporters.