CBB cuts key interest rate

Effective immediately, the CBB's rate on the one-week deposit facility is 1.50% down from 1.75% previously.

The CBB's lending standing facilities remain available for its banks at their initiative to assist them to meet their liquidity needs.

The CBB has decided to adjust the rate on the overnight deposit facility to 1.00 %, from 1.25% previously.

It has also decided to adjust the Repo lending rate through which it charges banks for the use of these facilities.

To reflect changes in current interbank market interest rates, the CBB has reduced the repo and lending rates to 3.50% from 4.75% previously.

The adjustment to the deposit and lending rates is part of a package of measures that the CBB has announced this week to ensure the smooth and effective functioning of the money markets in Bahrain.

The CBB is providing retail banks a daily FX-swap facility that allows banks to obtain Bahraini Dinar in return for US dollars at banks' initiative.

In addition, as well as being able to lend overnight funds against its usual eligible collateral (Bahraini dinar deposits at the CBB and Government of Bahrain T-bills) the CBB can now also accept Government of Bahrain short and long term Ijara sukuk as collateral without a discount.

This includes outstanding Government of Bahrain long term Ijara sukuk denominated in US Dollars.

The CBB will continue to examine the scope further to widen its collateral framework.

The Central Bank of Bahrain (CBB) continues to monitor global and local market developments closely and will consider additional measures to ensure the normal functioning of Bahraini markets should the circumstances require.