Monetary and Financial Update

In June 2017, a rise in interest rates by the US Fed saw the Saudi Arabian Monetary Authority (SAMA) mirroring this rise by increasing its reverse repo policy rate (RRR) by 25 basis points (bps) to 1.25 percent. SAMAs key policy repo rate, however, was unchanged at 2 percent. We see this as part of SAMAs continuous measures to ensure suitable levels of liquidity in the domestic financial system, especially so in the context of slower economic growth and rising funding costs for various reasons.