5 Gulf central banks decide to raise interest rates

The Saudi central bank announced a 0.5% increase in the repo rate from 1.25 to 1.75%.

The Saudi central bank also raised the reverse repurchase agreement rate by 0.5%, from 0.75 to 1.25%.

He said these decisions are consistent with his goal of maintaining monetary and financial stability.

The Central Bank of Kuwait said today, Wednesday, that it has decided to raise the discount rate by a quarter of a percentage point, from 1.75% to 2.00%, starting May 5, following the US Federal Reserve decision to raise interest rates.

Central Bank Governor Basil Ahmed Al-Haroun said the decision “comes in light of the follow-up to developments in local and global economic conditions, geopolitical developments and their impact on the significant increases in global inflation rates resulting from the rise in energy and material prices prime and disruptions in supply chains, which are a major source of imported inflation and its effects ”. A reflection on the consumer price index in the state of Kuwait.

In a related context, the Central Bank of Bahrain said today Wednesday that it raised the base interest rate for deposits for one week by 50 basis points to 1.75%.

The Central Bank of Bahrain also raised the interest rate for overnight deposits and overnight loans by 50 basis points to 1.5% and 3.0% respectively and raised the interest rate for four-week deposits by 75 basis points. basis points to 2.5%.

The Central Bank of the UAE said today Wednesday that it has decided to raise the base interest rate by 50 basis points, starting Thursday.

The Central Bank of the UAE has also decided to keep the rate applicable to the short-term liquidity loan from the Central Bank across all existing credit lines at 50 basis points above the base rate.

The central bank of Qatar has decided to increase deposit interest by 50 basis points to 1.50% and loan interest by 25 basis points to 2.75%.

The decisions of the central banks of the Emirates, Kuwait and Bahrain come after the Federal Reserve (the US central bank) on Wednesday raised the main interest rate by half a percentage point, as the most aggressive step so far in its battle against spikes in inflation .

Along with rising prices, the central bank has indicated that it will begin reducing the holdings of assets on its balance sheet by $ 9 trillion. The Fed was buying bonds to keep interest rates and the flow of money in the economy low, but the rise in rates necessitated a dramatic rethink of monetary policy.

The Fed said the closures linked to COVID-19 in China could exacerbate supply chain problems, as well as the Russian invasion of Ukraine causing enormous humanitarian and economic hardship.

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