Manama, Bahrain - Central Bank of Bahrain (CBB) said on Thursday that it decided to cut its key policy interest rate by 75 basis points, after reviewing the decision taken by the US Federal Reserve two days earlier.

"Effective immediately, the CBB's rate on the one-week deposit facility is 0.75 per cent down from 1.50 per cent previously," a CBB statement said.

The statement which pointed out that the CBB's lending standing facilities remain available for banks at their initiative to assist them to meet their liquidity needs also said that the rate on the overnight deposit facility would be adjusted to 0.25 per cent, from 1 per cent previously.

The Repo lending rate, through which the CBB charges banks for the use of these facilities, was also adjusted with lending rates reduced to 2.75 per cent from 3.50 per cent previously.

"The adjustment to the deposit and lending rates represents a continuation of measures taken by the CBB to ensure the smooth functioning of the money markets in Bahrain, and in accordance with the policy of pegging the Bahrain Dinar to the US dollar," the statement said. (dpa)