Saudi Arabia, UAE and Bahrain raise interest rates, while Qatar keeps them unchanged

The Central Bank of Saudi Arabia, the Central Bank of Bahrain and the Central Bank of the United Arab Emirates have raised interest rates following the U.S. Federal Reserve’s eighth consecutive interest rate hike since March 2022.

On the other hand, the Central Bank of Qatar decided to keep current interest rates.

In particular, the Central Bank of the UAE decided to raise the base rate on overnight deposits by 25 basis points, from 4.4% to 4.65%, as of Thursday, February 2, 2023.

The Central Bank also decided to keep the rate applied to borrowing short-term liquidity from the Central Bank through all existing credit lines at 50 basis points above the base rate.

The base rate, which is linked to the interest rate on reserve balances approved by the US Federal Reserve, determines the overall direction of the central bank’s monetary policy and also provides the minimum effective interest rate for the country’s overnight money market rates.

For its part, the Central Bank of Saudi Arabia raised the Repo Repo Agreement rate by 25 basis points to 5.25 percent and raised the Reverse Repurchase Agreement rate by 25 basis points to 4.75 percent.

The Central Bank of Saudi Arabia said its decision to raise the interest rate was made in light of monetary developments in global markets and taking into account the central bank’s objectives of maintaining monetary and financial stability.

The Central Bank of Bahrain also decided to raise the base interest rate on weekly deposits from 5.25 percent to 5.5 percent in light of developments in international financial markets and as part of the measures taken by the Central Bank to ensure a smooth performance of the money markets in the Kingdom of Bahrain.

The Central Bank of Bahrain said it had decided to raise the interest rate on overnight deposits from 5.00 percent to 5.25 percent, and to raise the interest rate on four-week deposits from 6.00 percent to 6.25 percent. to an increase in the interest rate set by the Central Bank for banks Retail sector for lending operations from 6.50 percent to 6.75 percent.

The Central Bank of Bahrain said it continues to monitor developments in the international and local markets in order to take any additional measures necessary to maintain monetary and financial stability in the Kingdom.

In turn, the Central Bank of Qatar decided to maintain the bank’s current interest rates, linked to the deposit interest rate, loan interest rate and repurchase rate, after evaluating the current monetary policy.

The Central Bank of Qatar said it is committed to keeping current interest rates at an appropriate level to support economic growth, noting that the deposit interest rate will remain at 5 percent, the lending rate at 5.5 percent, and the repurchase rate is at the level of 5.25 percent. .

The Central Bank of Qatar said it will continue to assess economic conditions and take into account all aspects that may affect financial stability, and the bank will review its monetary policy when necessary to take into account any changes in economic requirements.

Source: agencies