Gulf Central Banks Hike Rates as Fed Hikes 50bps


CAIRO, May 4 (Reuters) – (This story corrects UAE base rate, paragraph 5, in May 4 article)

Gulf central banks raised key interest rates on Wednesday as the US Federal Reserve raised its target policy rate by 50 basis points in the face of inflation hitting highs not seen in decades.

All Gulf countries have their currencies pegged to the US dollar, with the exception of Kuwait, which pegs the Kuwaiti dinar to a basket of currencies that includes the dollar.

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The central banks of Saudi Arabia, the United Arab Emirates, Qatar and Bahrain raised their key rates by 50 basis points. The Central Bank of Kuwait said it raised its discount rate by 25 basis points (bps) to 2%, in a less hawkish move than the Fed.

The Saudi Central Bank (SAMA) raised its repo and reverse repo rates by 50 basis points each to 1.75% and 1.25%, respectively.

The CBUAE said its base rate would rise by 50 basis points to 0.9%, effective Thursday.

The bank said it would keep the rate of borrowing short-term cash from the CBUAE through all standing credit facilities at 50 basis points above the base rate.

Qatar’s Central Bank said it would, effective Thursday, raise its deposit and repo rates by 50 basis points to 1.5% and 1.75%, respectively. Its lending rate will increase by 25 basis points to 2.75%.

The Central Bank of Bahrain said it raised its key rate, on its one-week deposit facility, by 50 basis points to 1.75%, in line with the Fed hike.

The CBB also raised its overnight deposit rate and lending rates by 50 basis points to 1.5% and 3%, respectively, and its four-week deposit rate was increased by 75 basis points. at 2.5%.

The Central Bank of Oman – the other member of the Gulf Cooperation Council – is expected to follow with a similar move.

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Reporting by Ahmad Elhamy and Ahmed Tolba in Cairo; Written by Yousef Saba; Editing by Andrea Ricci, William Maclean

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