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UAE Central Bank increases base rate by 50 basis points
Other GCC states also hike rates after US Federal Reserve move
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The Central Bank of the UAE (CBUAE) said on Wednesday it decided to increase its base rate by 50 basis points to 2.25% effective from Thursday, in lockstep with the US Federal Reserve's move as it seeks to fend off inflation at multi-decade highs.
The bank said it would maintain the rate on borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 bps above the base rate.
Other Gulf central banks also hiked their main interest rates on Wednesday as the US Federal Reserve raised its target policy rate by 50 basis points in the face of inflation at highs not seen in decades.
All Gulf countries have their currencies pegged to the US dollar, except Kuwait, which pegs the Kuwaiti dinar to a basket of currencies that includes the dollar.
The central banks of Saudi Arabia, Qatar and Bahrain raised their key rates by 50 bps.
The Central Bank of Kuwait said it increased its discount rate by 25 basis points (bps) to 2%, in a move less hawkish than the Fed’s.
The Saudi Central Bank raised its repo rate and reverse repo rates by 50 bps each to 1.75% and 1.25%, respectively.
The Central Bank of Qatar said it would raise, effective on Thursday, its deposit and repo rates by 50 bps to 1.5% and 1.75%, respectively. Its lending rate will increase by 25 bps to 2.75%.
The Central Bank of Bahrain said it raised its key policy rate, on its one-week deposit facility, by 50 bps to 1.75%.
The CBB also increased its overnight deposit rate and lending rates by 50 bps to 1.5% and 3%, respectively, and its four-week deposit rate was increased by 75 bps to 2.5%.
The Central Bank of Oman - the other member of the Gulf Cooperation Council - is widely expected to follow with a similar move.
(with inputs from agencies)
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