RIYADH, March 16 (Reuters) - Saudi Arabia’s current central bank policy rates are reasonable and balanced, and tapering of the U.S. Federal Reserve’s bond purchases is unlikely to affect the kingdom’s monetary policy direction, central bank chief Fahad al-Mubarak said on Sunday.
“Our policy rate, I think it is reasonable and balanced and it will achieve our policy objective given our fiscal situation,” he told an annual news conference.
“In terms of QE (quantitative easing), we were not affected much by its implementation in the first place. Now, that is being withdrawn, we don’t have to see an effect on our monetary policy or our banking system.”
Saudi Arabia, which pegs its riyal currency to the U.S. dollar, has kept its repo rate at 2.0 percent since January 2009 and its reverse repo rate at 0.25 percent since June 2009, after a series of cuts that followed the 2008 global financial crisis.
Asked whether he was concerned about the sustainability of Saudi Arabia’s public finances in coming years following large spending increases in the past, Mubarak said:
“In the last three years we had an expansionary budget but we were able to achieve surpluses. Going forward and given (the) forecast - actually (the) Reuters forecast for oil indicates that the rate is reasonable, and it will provide the government with a reasonable revenue going forward.”