UAE, Saudi Arabia and Bahrain among GCC central banks to raise rates in line with US Federal Reserve
Gulf states have raised interest rates after the US Federal Reserve hiked its rates overnight.
Gulf central banks that peg their currency to the dollar - including the UAE and Saudi Arabia - typically follow Fed decisions in lockstep.
Saudi Arabia’s central bank said it was raising its reverse repo rate by 25 basis points to 2.25 percent, and its repo rate by the same margin to to 2.75 percent.
Bahrain’s central bank raised its interest rate on its one-week deposit facility to 2.50 percent from 2.25 percent.
It also raised its overnight deposit rate to 2.25 percent from 2.00 percent, its one-month deposit rate to 3.25 percent from 3.00 percent, and its lending rate to 4.25 percent from 4.00 percent.
Kuwait’s central bank decided to keep its key discount rate unchanged at 3.0 percent. Kuwait pegs its dinar to a basket of currencies and has chosen to sit out the recent increases in US rates in order to preserve growth and keep down borrowing costs.
The UAE Central Bank announced that, effective Thursday, it has raised interest rates by 25 basis points while the repo rate rose by the same margin.
Wall Street stocks dropped Wednesday and the dollar rose against most major currencies after the Fed increased interest rates and signaled it expects to keep lifting rates gradually.
The Fed, as expected, boosted the lending rate to 2 percent to 2.25 percent, saying the labour market has continued to strengthen and economic activity has been rising at a strong rate.