The central banks of the UAE, Saudi Arabia, Bahrain and Qatar raised their benchmark borrowing rates after the US Federal Reserve increased its key interest rate at a more moderate level as it tries to balance fighting inflation and financial stability.
The Fed increased the policy rate by 25 basis points as it continues to push to bring inflation down towards its target range of 2 per cent and restore price stability amid market turmoil fuelled by recent bank failures in the world’s largest economy.
The Saudi Central Bank, better known as Sama, raised its repurchase agreement (repo) rate by a quarter-point to 5.50 per cent and its reverse repo rate by a similar margin to 5 per cent.
The UAE Central Bank raised its base rate for the overnight deposit facility by a quarter of a percentage point to 4.9 per cent, effective from Thursday.
The Central Bank of Bahrain also increased its key rate on one-week deposits by 25 bps to to 5.75 per cent.
The Central Bank of Qatar raised its repo rate by quarter of a percentage point to 5.50 per cent. It also increased its deposit rate by a similar amount pushing it to 5.25 per cent and the lending rate by 25 bp to 5.75 per cent.