Fitch Ratings: Fed Rate cuts add pressure on Saudi banks
Fitch Ratings-Dubai/London-19 March 2020: Saudi Arabia's banking sector faces extra pressure on margins as a result of the US Federal Reserve's latest interest rate cuts, Fitch Ratings says. Banks could also see rising funding costs and stressed liquidity if the Saudi government withdraws deposits to fund a widening deficit. The US rate cuts in response to the coronavirus outbreak exceeded market expectations and the Saudi Arabian Monetary Authority (SAMA) followed by cutting its official repo rate by 50bp on 3 March and by a further 75bp on 16 March due to Saudi Arabia's currency peg to the US dollar. The rate is now 1%, its lowest level ever.
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