Gulf central banks to review inflation measures

MANAMA - Gulf Arab central bankers will review the way they calculate inflation, Bahrain’s central bank said on Monday, after regional currency union talks ended inconclusively in Saudi Arabia last week.

By (Reuters)

Published: Mon 9 Apr 2007, 6:44 PM

Last updated: Sat 4 Apr 2015, 9:05 PM

An inflation target of no more than 2 percent above the regional average is the most contentious among the European Union-style criteria agreed by six Gulf states to create a single currency in the world’s top oil exporting region by 2010.

Most Gulf countries prefer to measure headline inflation but Qatar wants to use core inflation, stripping out the impact of rents which soared last year, lifting its annual inflation rate to 11.83 percent, the highest on record.

Central bankers failed at a meeting in the Saudi city of Medina last week to resolve that and other disputes holding up a final deal on monetary union.

‘The statistical committee (of central bank chiefs) will review the procedures for calculating the consumer price index in the Gulf Cooperation Council countries,’ Bahrain’s central bank said in a statement, without giving details.

The Gulf Cooperation Council is a regional political and economic bloc made up of Saudi Arabia, Bahrain, Qatar, Kuwait, Oman and the United Arab Emirates.

Last year Oman ruled out meeting the 2010 deadline, saying it believed some of the convergence criteria could not be achieved in that time.

Currency markets are betting any delay in monetary union will prompt some Gulf states to revalue currencies pegged to the falling dollar.

Kuwait and the United Arab Emirates cut key interest rates last week as speculators piled pressure on their currency pegs.

The dollar’s slide to a two-year low against the euro last week has made some Gulf Arab imports more expensive, driving up inflation.

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