Monday, the Kuwaiti central bank cut its key interest rate by a quarter point.

The Central Bank of Kuwait announced in a statement that it is cutting the discount rate to 3.5% from 3.75%. This is the first reduction this year.

In December last year, the central bank reduced the discount rate by 50 basis points. The move came after the US Federal Reserve's decision to cut the interest rate to between zero and 0.25%, the lowest target in over 50 years. Kuwait central bank slashed rates in four instances last year.

All members of the Gulf Cooperation Council, except Kuwait, have pegged their currencies to the US dollar. In 2007, the Kuwaiti dinar was re-pegged to a basket of currencies that includes the U. S. dollar.

Central banks in the Gulf region have cut interest rates aggressively amid other measures to battle a liquidity crunch. Further, the falling oil price is likely to slow growth in these countries.

The latest rate cut was meant to be an additional injection into the sluggish local economy to help it shore up the position of local market forces, among them important financial institutions and firms, the Kuwait News Agency reported.

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