February 02, 2023 (MLN): Central banks in the Gulf Cooperation Council (GCC) on Wednesday increased their interest rates after the US Federal Open Market Committee (FOMC) delivered its eighth consecutive hike, albeit the smallest at 25 basis points (bps), in an effort to control inflation.
The central bank of the United Arab Emirates (UAE) raised its base rate on overnight deposits by 25 bps to 4.65%, as announced in a statement.
Most central banks in the GCC typically mirror the Federal Reserve’s policy rate changes as their currencies are linked to the US dollar.
In 2022, the region saw an inflation average of 5-6%, which is higher compared to the past decade but lower compared to many western countries.
The Saudi Arabian Monetary Authority (SAMA) raised its repo and reverse repo rates to 5.25% and 4.75%, respectively.
Meanwhile, Bahrain’s central bank also increased its key interest rates by 25 bps, with its one-week deposit facility rate set at 5.50% and the overnight deposit rate at 5.25%.
However, the central Bank of Qatar opted not to raise its rates in line with the US, having evaluated its “current monetary requirements.” The bank kept its lending rate at 5.50%, deposit rate at 5%, and repo rate at 5.25%, as reported by the state news agency QNA on Twitter.
Qatar Central Bank has decided to continue with the current interest rates for QCB deposit rate, QCB lending rate, and QCB Repo rate. #QNA#Economypic.twitter.com/K9MP5vBMyY
