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Gulf nations follow US Fed’s quarter-point hike to maintain pegs
Central banks in the Arab Gulf including in Saudi Arabia and Qatar followed the US Federal Reserve’s 25 basis-point rate hike on Wednesday as they seek to protect their currencies’ peg against the US dollar.
Cost pressures across the region are relatively contained compared with the US, where inflation ran at 6 percent last month. Still, with little room to maneuver due to the greenback-pegging policy, Gulf policymakers tend to move in lockstep with the US central bank decisions.
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Saudi Arabia’s central bank increased its repo rate by 25 basis points to 5.5 percent and its reverse repo rate to 5 percent.
Qatar’s central bank raised its repo rate by 25 basis points to 5.5 percent, its lending rate to 5.75 percent and its deposit rate to 5.25 percent.
Bahrain matched the decision by raising its overnight deposit rate by 25 basis points to 5.5 percent.
The United Arab Emirates raised its overnight deposit facility by 25 basis points from 4.65 percent to 4.90 percent, effective from March 23.
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