GCC banks lift interest rates after Fed hike

Flags of the Gulf Cooperation Council countries

The central banks of Saudi Arabia, the UAE, Kuwait, Qatar and Bahrain hiked their benchmark interest rates following the US Federal Reserve decision on Dec. 14 to raise its key rate by 50 basis points (bps). 

The Saudi Central Bank (SAMA) decided to lift its reverse repo rate from 50 bps to 450 bps and the repo rate to 500 bps from 450 bps.

The Central Bank of the UAE (CBUAE) also increased its base rate for the overnight deposit facility (ODF) by 50 bps to 4.4%, effective from today, Dec. 15.

The CBUAE maintained the rate applicable to borrowing short-term liquidity from the regulator through all standing credit facilities at 50 bps above the base rate.

The Central Bank of Kuwait (CBK) also hiked its discount rate by 50 bps to 3.5% from 3%, effective from today.

Qatar Central Bank (QCB) raised its repo rate by 50 bps to 5.25%. It also increased its deposit rate by 50 bps to 5% and the lending rate by 50 bps to 5.50%.

The Central Bank of Bahrain (CBB) increased its key policy rate on the one-week deposit facility to 5.25% from 4.75%. It also hiked the overnight deposit rate to 5% from 4.50%, the four-week deposit rate to 6% from 5.50% and the lending rates to 3% from 2.5%.

The Federal Reserve lifted interest rates by 50 bps to a range of 4.25%-4.50%, from 4% and 3.75%.

The US Central Bank expected rate of 5.1% by the end of 2023, up from its estimate of 4.6% in September.

It raised interest forecasts to 4.1% in 2024 and 3.1% in 2025, compared to previous estimates of 3.9% and 2.9%, respectively.