UAE, GCC central banks follow Fed, hike interests by 0.75%
In line with the US Federal Reserve move, the Central Bank of the UAE has raised the base rate applicable to the overnight deposit facility by 75 basis points with effect from July 28, 2022.
The UAE central bank maintained the interest rate applicable to borrowing short-term liquidity from the regulator through all standing credit facilities at 50bps above the base rate, the regulator said on Wednesday.
The base rate, which is anchored to the US Federal Reserve’s interest on reserve balances, signals the general stance of the UAE’s central bank monetary policy and provides an effective interest rate floor for overnight money market rates.
Most central banks in the GCC followed the Fed’s policy rate moves due to their currencies being pegged to the US dollar.
Kuwait was the first Gulf central bank to hike in unison with the Fed move, matching the 0.75 per cent.
Saudi central bank Sama also decided to raise the repurchase agreement (Repo) rate by 75 basis points to three per cent from 2.25 per cent. It also increased the reverse repurchase agreement (reverse repo) rate to 2.5 per cent from 1.75 per cent.
The Central Bank of Qatar raised its main deposit rate by 75bps to three per cent while the repo rate was raised to 3.25 per cent. It also hiked the lending rate by 50bps to 3.75 per cent.
Bahrain’s central bank has also confirmed that interest rates will be higher by 0.75 per cent with effect from July 28,2022.
