Central banks in the Gulf Cooperation Council (GCC) have raised their key interest rates following the US Federal Reserve's decision to raise rates by 25 basis points on Wednesday.

 

The Central Bank of Saudi Arabia (SAMA) raised its repo rate by 25 basis points to 5.75%, while the UAE Central Bank raised its base rate on its Overnight Deposit Facility to 5.15%. The central banks of Bahrain, Qatar, and Oman also raised their key interest rates by 25 basis points.

 

The GCC central banks' decision to raise interest rates is in line with their monetary policy frameworks, which are designed to keep inflation in check. The region's currencies are pegged to the US dollar.

 

The rise in interest rates is likely to have a mixed impact on the GCC economies. On the one hand, it will help to cool inflation, which has been rising in recent months. On the other hand, it could dampen economic growth, as it will make it more expensive for businesses to borrow money.

 

Central Bank of Bahrain (CBB) said in a statement: "In light of the development of the international financial market and the continuous measures taken by the  to achieve monetary and financial stability, the CBB has decided, effective immediately, to raise its key policy interest rate. CBB’s key policy interest rate on the one-week deposit facility is raised from 6.00% to 6.25%." 

 

The CBB has also decided to raise the overnight deposit rate from 5.75% to 6.00%, while maintaining the four-week deposit rate at 6.75% and the lending rates at 7.00%.  -TradeArabia News Service