The United Arab Emirates decided to cut their bank repository rate by 0.25% to 5.25%; Saudi Arabia decreased its benchmark rate for deposits also by 0.25% to 4.0%; Qatar and Bahrain reduced their deposit rates by the same amount - 0.25% to 4.0%. Kuwait refrained from changing the country’s interest rate, because they’ve already removed their currency’s peg to dollar back in May 2007.
The U.S. Federal Open Market Committee lowered its interest rate for open market operations by 25 basis points to 4.25%, while the discount rate for central bank to banks type of lending lending was also cut by 0.25% to 4.75%.
Little time remains before today’s FOMC meeting, which will decide the future target interest rate for the U.S. banks. Dollar gained a some weight against euro on some marginal expectations that Federal Reserve will cut rates by just 25 basis points instead of 50 points predicted by the current futures rate.
European Central Bank published its scheduled Monetary policy decisions today, leaving the main refinancing operations interest rate at 4.00%. Jean-Claude Trichet, Central Bank President, commented this decision saying that ECB is ready to fight the pressure of the rising inflation.
The Bank of England’s Monetary Policy Committee today decided to reduce the official interest rate paid on commercial bank reserves by 0.25% from 5.75% to 5.5%. The decision was driven mainly by the slowdown in the economical output and moderating consumers’ spendings.
New Zealand dollar rose against all other major currencies after the Reserve Bank of New Zealand left the Official Cash Rate (OCR) - short-term lending interest rate - unchanged at 8.25%. And as it was hinted by Bank Governor Alan Bollard the rate is not likely to be lowered until 2009.
Bank of Canada lowered overnight interest rate by 0.25% to 4.25% today during its scheduled meeting; this interest rate will be used until at least the next such meeting which will be held on January 22, 2008.
U.S. dollar ended this week on a rising edge against euro, pound and yen after Fed’s Chairman Ben Bernanke joined Donald Kohn in his hinting the markets, that next interest rates cut will be most probably made during FOMC’s December 11 meeting.
October consumer prices inflation report added some new troubles for ECB to worry about as the released 2.6% CPI growth last month exceeded ECB’s target of 2.0%, while the economy growth is not performing at the pace that would allow another rate hike soon.
Recent talks by Federal Reserve Vice Chairman Donald Kohn about possible interest rates cut by the Fed added confidence to the Forex market traders that rely on buying risky currencies with the cheap low risk Japanese yen - so called carry traders.