DUBAI (AFP) – Saudi Arabia has announced that it is slashing its key interest rate by one percentage point to 3.0 percent in response to softening inflationary pressures, Al-Arabiya news channel reported.

The Saudi Arabian Monetary Agency (SAMA) said it is reducing the repurchase (repo) rate, the country’s lending benchmark, by 100 basis points, the Dubai-based satellite channel said.

It is the third cut in six weeks and the rate has almost halved since early October, when it stood at 5.5 percent.

Inflation in Saudi Arabia surged earlier this year, peaking at 11 percent in August.

In early October, SAMA reduced the repo rate from 5.5 percent to 5.0, dropping it to 4.0 percent later in the same month as it joined central banks around the Gulf in drastic action to fend off the global credit crunch.

The Saudi stock market, the largest Arab bourse, shed 9.2 percent of its value on Saturday, bringing its losses this year to 60 percent.

Prices of crude oil, on which the country depends for most of its income, have plunged by two-thirds since their peak above 147 dollars a barrel in July.