Gulf central banks raise interest rates based on US Fed hike
Now Reading
Gulf central banks raise interest rate based on US Federal Reserve hike

Gulf central banks raise interest rate based on US Federal Reserve hike

The central banks announced interest rate hikes by 25 basis points

Gulf Business
interest rate - US Fed

The central banks of the UAE, Saudi Arabia, Bahrain and Qatar hiked their benchmark borrowing rates after the US Federal Reserve raised its key interest rate by 25 basis points (bps) on March 22.

US stocks retreated from near two-week highs on Wednesday after the Federal Reserve raised borrowing costs.

The US Fed signalled that it might be on the verge of pausing future interest rate hikes amid recent turmoil in financial markets, reported the state news agency WAM.

The Central Bank of the UAE (CBUAE) raised the base rate applicable to the Overnight Deposit Facility (ODF) by 25 bps – from 4.65 per cent to 4.90 per cent, effective from Thursday, March 23.

The CBUAE also decided to maintain the rate applicable to borrowing short-term liquidity from the bank through all standing credit facilities at 50 basis points above the base rate.

 

Earlier in February, CBUAE raised the base rate applicable to the overnight deposit facility (ODF) by 25 basis points – from 4.4 per cent to 4.65 per cent.

This decision was taken following the US Federal Reserve Board’s announcement on February 1 to increase the Interest on Reserve Balances (IORB) by 25 basis points.

Read: UAE central Bank raises base rate by 25 basis points

Also read: UAE Central Bank raises interest rate by 75 basis points

Related read: CBUAE, Gulf central banks raise interest rates following US Fed rate hike

Interest rate hiked by other GCC banks

GCC central banks normally normally change their interest rates in lockstep with the Federal Reserve as Gulf states’ currencies – the UAE dirham, Qatari riyal, Saudi riyal and Bahraini dinar – are pegged to the dollar.

Saudi Central Bank raised the rate of repurchase agreement (repo) by 25 bps to 5.50 per cent, and the rate of reverse repurchase agreement (reverse repo) by 25 bps to 5 per cent, citing global monetary developments.

In Bahrain, the one-week deposit facility rate was increased to 5.75 per cent from 5.5 per cent and the overnight deposit rate was raised to 5.5 per cent from 5.25 per cent.

The Central Bank of Qatar likewise raised its interest rates by 25 basis points effective on Thursday, hiking deposit, lending and repo rates by 25 bps to 5.25 per cent, 5.75 per cent and 5.5 per cent, respectively.

The Central Bank of Oman (CBO) also increased its repo rate for local banks at the rate of 25 basis points to 5.50 per cent. The CBO has cautioned banks not to increase the cost of borrowing to consumers given ample liquidity in the system.

You might also like


© 2021 MOTIVATE MEDIA GROUP. ALL RIGHTS RESERVED.

Scroll To Top