After the US Federal Open Market Committee (FOMC) announced its eighth straight boost, although the lowest at 25 basis points (bps), as part of its ongoing battle to control inflation, central banks in the GCC increased interest rates on Wednesday night. According to a statement, the Central Bank of UAE increased the overnight base rate by 25 bps to 4.65%.
Since the GCC’s currencies are tied to the US dollar, the majority of their central banks typically follow changes in the Federal Reserve’s policy rate. Inflation in the area has averaged 5-6% in 2022, greater than it has in more than ten years but still far lower than in many western nations, according to Zawya. The repo and reverse repo rates of the Saudi Central Bank, also known as SAMA, were increased to 5.25% and 4.75%, respectively. The central bank of Bahrain likewise increased its benchmark interest rates by 25 basis points. Its overnight deposit rate was increased to 5.25%, while its one-week deposit facility rate was boosted to 5.50%.
But after evaluating its “current monetary requirements,” the central bank of Qatar opted against hiking rates in concert with the US. According to the state news agency QNA on Twitter, the bank kept its lending rate at 5.50%, deposit rate at 5%, and repo rate at 5.25%.
