Kuwait's central bank said on Thursday it had cut its benchmark discount rate to strengthen the banking sector and boost confidence in the local economy.

The central bank "will not hesitate to take the necessary action and procedures to strengthen stability of pillars of the national economy and preserve the safety and strength of the local banking sector," Governor Sheikh Salem Abdul-Aziz Al-Sabah told state news agency Kuna.

He did not elaborate.

Earlier, Kuwait cut its discount rate by 25 basis points after a US rate cut a day earlier, its second move to lower the benchmark rate this month.

The Kuwaiti central bank reduced the discount rate to 4.25 percent from 4.5 percent while cutting the repurchase rate to 2 percent from 2.5 percent.

Kuwait is the only Gulf oil producer that does not peg its currency to the US dollar.

The US Federal Reserve lowered interest rates by 50 basis points on Wednesday, part of a barrage of measures deployed around the world to fight a deep economic slowdown. - Reuters