5 Gulf Central Banks Follow Federal Reserve Rate Hike

Central banks in 5 Gulf countries raised interest rates after the Federal Reserve's decision to hike rates on Wednesday.

The Federal Reserve raised the interest rate by 75-basis-points for the second meeting in a row, bringing the interest rate between 2.25% and 2.50%, in an attempt to curb collective inflation.

Saudi Arabia

According to that decision, the Saudi Central Bank “SAMA” raised the rate of “repo” by 75-basis-points from 2.25% to 3%, as well as the rate of “reverse repo” agreements by 75-basis-points from 1.75 to 2.50%.

The Central Bank of the United Arab Emirates also decided to raise the “base rate” on overnight deposit facilities by 75 basis points, as of Thursday, July 28, 2022.

The Central Bank also decided to keep the rate applicable to borrowing short-term liquidity from the Central Bank through all existing credit facilities at 50 basis points above the base rate.

Kuwait

Central Bank of Kuwait Governor Basil Ahmad Al-Haroun stated that the Central Bank decided to raise the discount rate by a quarter of a percentage point from 2.25% to 2.50%, as of July 28.

The governor explained that the Central Bank’s decision came in the light of recent developments in the local and global economic conditions and geopolitical developments and the impact of this on global inflation rates and its reflection on the consumer price index in the State of Kuwait.

Qatar

Qatar Central Bank decided, based on economic, local and international data, to raise the bank’s interest rate for deposit and repurchase rates by 75 basis points, to 3% and 3.25%, respectively and raise the lending rate by 50 basis points to 3.75%, provided that the application is implemented as of tomorrow.

Bahrain

In the Kingdom of Bahrain, its Central Bank also decided to raise the benchmark interest rate on one-week deposits from 2.50% to 3.25%.

The interest rate on overnight deposits was also raised from 2.25% to 3.00%, and the interest rate on deposits for a period of four weeks was raised from 3.25% to 4%.

This comes in addition to raising the interest rate imposed by the Central Bank on retail banks in return for lending facilities from 3.75% to 4.50%.