QATAR - Abdullah Al-Thani.
At a meeting of Arab central bankers in Damascus, Shaikh Abdullah said: "We are taking measures...which would lead to a gradual decrease in inflation". Kuwait in March broke ranks with the other five GCC members - Saudi Arabia, the UAE, Qatar, Bahrain and Oman - when it shifted to a basket of currencies, arguing rising cost of non-dollar imports was pushing up inflation. The FT on Sept. 12 quoted Simon Williams, an economist with HSBC in Dubai, as saying it was too early to judge whether Kuwait's revaluation would tame inflation, adding: "Kuwaiti inflation still seems to be a domestic story". Kuwait's drop of the dollar peg it adopted a few years ago to usher in a planned GCC monetary union in 2010, threw into doubt that project and raised the possibility other GCC states would follow suit. At a recent meeting of GCC central bank governors Hamad al-Sayari, governor of the Saudi Arabian Monetary Agency (SAMA), said meeting the 2010 deadline would be increasingly difficult but reaffirmed GCC members' commitment to the dollar peg. GCC states are concerned by the potential for a US interest rate cut this month. GCC rates usually track the Federal Reserve but economists say it is unlikely the booming GCC, cyclically out of step with the US, will follow any Fed decision to cut rates in a bid to revive growth after the US sub-prime crisis. Riyadh did not follow several Fed decisions in 2006.
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|Publication:||APS Review Downstream Trends|
|Date:||Sep 17, 2007|
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