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Saudis cut rates to trigger growth

SAUDI Arabia's central bank cut its repurchase rate to 2 percent from 2.5 percent and the reverse repurchase rate to 0.75 percent from 1.5 percent to help boost economic growth in the biggest Arab economy.

The cuts, even though expected, are "aggressive" and will help reduce borrowing costs "substantially" for companies, John Sfakianakis, chief economist at Saudi British Bank, said in an interview with Bloomberg News from Riyadh yesterday.

"These measures should help to ensure that credit is available to genuine corporate demand at lower rates," state-run Saudi Press Agency reported yesterday, citing a statement from the Saudi Arabian Monetary Agency. "SAMA has been closely monitoring money market developments following its monetary measures taken since October 2008. Domestic money market rates have positively responded to monetary stimulus and the recent global easing in interbank rates."

The economy of Saudi Arabia is expected to slow to 1.6 percent this year from 4.8 percent in 2008.


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