Inflation Mechanisms, Expectations and Monetary Policy in Saudi Arabia

Saudi Arabia is a fiscally dominant open economy. The exchange rate anchor provides the long -term framework for monetary policy. There is only limited scope to diverge from US interest rates but SAMA retains flexibility in deploying prudential guidelines, adjusting reserve requirements and issuing SAMA bills to manage liquidity. Inflation developments depend strongly on international prices, as well as domestic supply side factors such as housing in particular. Full Publication: 'http://ssrn.com/abstract=2870167' Inflation Mechanisms, Expectations and Monetary Policy