Monetary Policy Transmission in Oman

June 13, 2024

Preview Citation

Format: Chicago

Thomas Kroen. Monetary Policy Transmission in Oman, (USA: International Monetary Fund, 2024) accessed December 3, 2024

Summary

Amid a pegged exchange rate to the US dollar and an open capital account, Oman’s policy rates move closely with US monetary policy. In this analysis, we show empirically that transmission from policy rates into effective lending and deposit rates remains subdued in Oman, even compared to GCC peers that similarly face a high oil price environment with persistent excess liquidity in the banking system. A cap on personal loan rates and low exposure of banks to SMEs and riskier borrowers limit passthrough into effective lending rates and credit conditions. The note documents ongoing actions by Omani policymakers to strengthen transmission and provides further recommendations on liquidity management, reserve management, and relaxing the interest rate cap.

Subject: Asset and liability management, Central bank policy rate, Credit, Deposit rates, Excess liquidity, Financial services, Interest rate ceilings, International organization, Monetary policy, Money

Keywords: Central bank policy rate, Credit, Credit growth, Deposit rates, Excess liquidity, Fed policy rate hike, Interest rate ceilings, Monetary policy transmission, Oman's policy rates move, Transmission from policy

Publication Details

Pages:

9
Volume:

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DOI:

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Issue:

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Series:

Selected Issues Paper No. 2024/018
Stock No:

SIPEA2024018
ISBN:

9798400278358
ISSN:

2958-7875

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