Arab Central Banks Raise Base Interest Rates
The central banks of the UAE, Saudi Arabia, Bahrain and Kuwait raised their benchmark interest rates after the US Federal Reserve decided to raise key rates to slow inflation. Most central banks in the Gulf countries track changes in US rates because their currency is pegged to the US dollar.
The Central Bank of Saudi Arabia raised the repo rate by a quarter of a percentage point to 1.25 percent. Since March 17, the Central Bank of the United Arab Emirates has also raised the base rate by a quarter of a percentage point.
The discount rate of the Central Bank of Kuwait was raised by a quarter of a percentage point to 1.75 percent. In addition, the Central Bank changed interest rates for the entire interest rate yield curve. This decision affected the Bank's bonds and term deposits.
The Central Bank of Bahrain raised its base rate on one-week deposits by 25 basis points to 1.25 percent, while the Central Bank of Qatar raised its buyback rate by 25 basis points. He kept the deposit rate at the current level of 1% and the lending rate at 2.5%.
The Fed's rate hike of 25 basis points from near zero - the first since 2018 - comes amid an uncertain economic outlook and shifts in energy and commodity markets that have been hit by the aftermath of the Russia-Ukraine conflict.
Earlier, the Central Banks of the Gulf States cut rates after the Fed's unexpected decision to offset the impact of the coronavirus on the economy.