​UAE, Saudi Arabia, Bahrain and Kuwait raise interest rates after US Federal Reserve decision

Four Gulf States have raised their interest rates following a historic decision by the United States Federal Reserve.

The organisation increased interest rates for the first time in nine years on Wednesday in the belief that the US economy had largely recovered from the 2007 to 2009 financial crisis.

Reuters reported that the UAE central bank raised interest rates on Thursday on its certificates for deposits by 25 basis points.

Certificates of deposit are the monetary policy instrument used by the UAE central bank through which changes in interest rates are transmitted, the newswire said.

Other central banks in Saudi Arabia, Kuwait and Bahrain made similar moves.

Saudi Arabia’s central bank raised its benchmark reverse repurchase rate by 25 basis points to 50 basis points, state news agency SPA reported.

Meanwhile, Bahrain’s central bank said it had decided to raise its key policy interest rate to 0.50 per cent from 0.25 per cent. The rate on its one-week deposit facility was raised to 0.75 percent from 0.50 percent. The central bank said it was keeping its repo and lending rates at 2.25 percent.

Kuwait’s central bank raised its discount rate by 0.25 percent to 2.25 percent, state news agencyKUNA reported.

The central bank governor reportedly said the decision to raise the rate was to guarantee the currency’s competitiveness and attractiveness.