5 Gulf central banks react to central bank raising interest rates

Ahmed Hadem / Anatolia

Following the decision of the Federal Reserve, the central banks of Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain and Qatar announced an immediate hike in interest rates.

On Wednesday, the Federal Reserve raised the federal fund rate by 75 basis points, settling in the range of 1.50-1.75 percent.

Most Gulf central banks said in separate statements that their decision to raise interest rates was aimed at maintaining monetary and financial stability and in light of local and global developments.

** Saudi Arabia

In a quick response, the Saudi central bank decided to raise the “repo” rate on repurchase agreements from 0.5 percent to 1.75 percent to 2.25 percent.

The Saudi central bank has raised the rate of reverse repurchase agreements from 0.5 percent to 1.75 percent.

** United Arab Emirates

Although the Emirates Central Bank approved the central bank’s actions, it raised the base interest rate by 75 basis points.

With all the existing credit facilities, the central bank has decided to keep the short-term liquidity-to-credit ratio above 50 basis points.

** Diameter

Qatar’s central bank has approved raising the bank’s interest rate on deposits by 75 basis points to 2.25 percent.

It raised the bank’s lending rate by 50 basis points to 3.25 per cent, while the repo rate “repo” was raised by 75 basis points to 2.50 per cent.

** Two seas

Bahrain’s central bank has raised the overnight deposit rate by 75 basis points to 2.25 percent.

It also raised the interest rate on night-time deposits from 1.50 per cent to 2.25 per cent and raised the interest rate on four-week deposits from 2.5 per cent to 3.25 per cent.

Bahrain has raised the central bank’s interest rate on retail banks from 3.00 to 3.75 percent.

** Kuwait

The central bank, Kuwait, also decided to raise the discount rate by a quarter of a percentage point to 2.25 percent, higher than the rate raised by the central bank.

He explained that adjustments would be made to varying amounts of money market intervention rates currently in use for all periods of the interest rate structure.

The instruments of the Central Bank of Kuwait include repo operations, central bank securities and securities, in addition to public credit instruments, the system for accepting deposits and direct intervention instruments.

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