Gulf Central Banks raise interest rates following the Fed’s increase

In response to the US Federal Reserve’s same action, the UAE Central Bank increased its benchmark borrowing rate. CBUAE has decided to raise the Base Rate applicable to the Overnight Deposit Facility (ODF) by 50 basis points – from 3.9% to 4.4%, effective from Thursday, 15 December 2022. This decision was taken following the US Federal Reserve Board’s announcement on December 14 to increase the Interest on Reserve Balances (IORB) by 50 basis points.
Central banks hike rates
The CBUAE also has decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the Base Rate.
The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy. It also provides an effective interest rate floor for overnight money market rates.
The central banks of Saudi Arabia (Sama), Bahrain, and Qatar also increased their interest rates following the US Federal Reserve Board’s announcement.
Sama, the Central Bank of Bahrain, and QCB all announced increases in interest rates of 50 basis points.The Central Bank of Kuwait’s (CBK) Board of Directors had voted to increase the discount rate by 0.50%, from 3.00% to 3.50%, starting on December 7, 2022.