The Central Bank of Bahrain has cut its overnight deposit interest rate by 25 basis points, lowering it to 4.25%, the CBB announced in December 2025. The decision was taken to maintain monetary and financial stability in the Kingdom of Bahrain and follows a corresponding rate reduction by the United States Federal Reserve, to which Bahrain's monetary policy is closely linked through the Bahraini dinar's long-standing peg to the US dollar.
THE OVERNIGHT DEPOSIT RATE
The overnight deposit rate is the rate at which commercial banks operating in Bahrain can place surplus funds with the CBB on an overnight basis.
ALIGNMENT WITH THE FED
Other Gulf Cooperation Council central banks that maintain dollar pegs, including those of Saudi Arabia, the United Arab Emirates and Qatar, have similarly aligned their policy rates with Federal Reserve decisions.
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