Oman- CBO chief says central bank keeps close eye on expected US rate hikes

(MENAFN- Muscat Daily) Muscat- The Central Bank of Oman (CBO) is keeping a close watch for any expected change in the US monetary policy amid concerns that the faster than expected recovery in US job market could prompt the US Federal Reserve to accelerate interest rate hikes.

'We are monitoring the situation. Also, our fixed interest rate policy provides limitations on what we can do. But we are still monitoring and we feel it still creates a reasonable environment for investment,' H E Tahir bin Salim al Amri, executive president of the CBO, said while speaking to reporters on the sidelines of an event on Wednesday.

Oman follows a fixed-exchange rate regime, keeping Omani rial pegged with the US dollar.

The robust job data recently reported by the US authorities raised the speculation of a steep rise in inflation, which might prompt the Federal

Reserve to accelerate rate hike cycle. There are concerns that if US Federal Reserve raises rates faster then it could make it costlier for countries like Oman to borrow from international market to finance the deficit.

Fears of early rate hikes in the US resulted in panic selling in global stock markets earlier this week.

On the recent fall in global stock markets, H E Amri said, 'As the situation is stablising now, corrective actions have been taken. Hopefully things will go back to normal. It is just the market correcting itself. And there are no concerns for Oman.'

On recovery in global crude prices, H E Amri said, 'Any extra revenues are always good, hopefully this will at least give us extra foreign reserves and a breathing space. Now Oman can go ahead and implement whatever programmes the government has been working to make the fiscal situation much better.'

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