Gulf Countries - CC via NOAA National Centers for Coastal Ocean Sciences
CAIRO - 22 September 2022: Central banks of some Gulf countries tended to raise interest rates following the increase in the United States interest rates by 75 basis points on Sept. 21.
The Central Bank of the United Arab Emirates decided to raise the interest rates to move in parallel with the USA rate increase, which resulted in an increase by 75 basis points, to reach the overnight deposit from 2.4 percent to 3.15 percent.
The Emirati bank stated in a statement that it would maintain the rate on borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the base rate.
The Saudi Central Bank (SAMA) raised its reverse repo rate by 75 basis points (bps) to 325 bps from 250 bps. It also lifted its repo rate to 375 bps (3.75 percent) from 300 bps.
As for Bahrain, the central bank also raised its key policy interest rate on the one-week deposit facility from 3.25 percent to 4.00 percent. The CBB has also decided to raise the overnight deposit rate from 3.00 percent to 3.75 percent, the four-week deposit rate from 4.00 percent to 4.75 percent and the lending rates from 4.50 percent to 5.25 percent.
Furthermore, the Qatar Central Bank also announced raising the lending interest rate by 75 basis points to 4.5 percent, and decided to raise the deposit interest rate by 75 basis points to 3.75 percent.
Meanwhile, the Central Bank of Kuwait announced raising the discount rate by a quarter of a percentage point to 2.75 percent, which is lower than the rates of the US Federal Reserve raising interest rates. This is because Kuwait pegs its currency to a basket of currencies, including the dollar, unlike some Gulf countries that link its currency completely to the US dollar, which means that the central banks of those countries will directly increase interest rates by the same US percentage, starting Thursday.
The Federal Open Market Committee (FOMC) announced raising its key interest rates by 75 basis points (bps) in an effort to combat decades-high inflation.
This is the third time in a row for the Fed to raise interest rates against the background of its struggle with the US soaring inflation due to the Ukraine crisis and its impacts on world economies.
Federal Reserve officials forecast they would reach 4.6 percent in 2023, stepping up their fight to curb inflation that’s persisted near the highest levels since the 1980s, US magazine Fortune reported.