DUBAI: Saudi Arabia has announced that it is slashing its key interest rate by one percentage point to 3.0 per cent in response to softening inflationary pressures, Al-Arabiya news channel reported.

The Saudi Arabian Monetary Agency (SAMA) said it is reducing the repurchase (repo) rate, the country's lending benchmark, by 100 basis points, the Dubai-based satellite channel said.

It is the third cut in six weeks and the rate has almost halved since early October when it stood at 5.5 per cent.

Inflation in Saudi Arabia surged earlier this year, peaking at 11 per cent in August.

In early October, SAMA reduced the repo rate from 5.5 per cent to 5.0, dropping it to 4.0 per cent later in the same month as it joined central banks around the Gulf in drastic action to fend off the global credit crunch.

The Saudi stock market, the largest Arab bourse, shed 9.2 per cent of its value on Saturday, bringing its losses this year to 60 per cent.

Prices of crude oil, on which the country depends for most of its income, have plunged by two-thirds since their peak above 147 dollars a barrel in July.


- AFP/so