MUSCAT: The Central Bank of Oman (CBO) announced on Wednesday that it will cut its interest rate on repo operations with local banks by 25 basis points, bringing the rate down from 5.0% to 4.75%, effective Thursday. This decision reflects the CBO’s proactive approach to maintaining sufficient liquidity in the banking system and safeguarding domestic financial stability. By reducing the repo rate, the central bank aims to ease borrowing costs for banks, enabling them to extend more affordable credit to businesses and consumers and thereby stimulating economic activity.
The reduction in the repo rate comes at a time when global financial markets are navigating shifting monetary policies, inflationary pressures, and uncertainty in capital flows. Oman’s banking sector, though robust, is closely linked to regional and international developments, and the CBO’s action signals a commitment to ensuring its resilience. Lowering the cost of liquidity for local banks helps mitigate funding pressures, maintain credit supply, and strengthen the overall financial system in the face of potential external shocks.
Market analysts view the move as a prudent step that aligns Oman’s monetary policy with evolving economic conditions and supports long-term growth objectives. The measure also complements broader fiscal and economic reforms aimed at diversifying the economy and encouraging private sector investment. By making financing more accessible, the CBO’s rate cut can help boost consumer confidence, spur lending to small and medium enterprises, and provide momentum for infrastructure and development projects.
This policy adjustment reinforces the central bank’s role in balancing stability and growth. By acting swiftly to fine-tune interest rates, the CBO demonstrates its readiness to respond to changing economic indicators and support sustainable expansion. The reduction in the repo rate not only enhances liquidity in the financial system but also strengthens the transmission of monetary policy, ensuring that benefits reach businesses and households, contributing to a more resilient and competitive Omani economy.
