Saudi, Gulf central banks lift rates after Fed hike

The central banks of Saudi Arabia, the United Arab Emirates, Kuwait, and Bahrain have raised interest rates following the U.S. Federal Reserve’s move to hike the federal funds rate to a 0.5-0.75 percent target range.

The Saudi Arabian Monetary Authority (SAMA) raised the reverse repurchase rate – the rate at which commercial banks deposit money with the central bank – on Wednesday by 25 basis points to 0.75 per cent.

“This move is in line with recent developments in domestic and international financial markets,” SAMA said, without providing any further details.

However, the central bank decided to keep the repo rate unchanged at 2 percent, which could indicate that it is trying to prevent the slump in oil prices from hurting the liquidity of Saudi lenders.

The UAE central bank said on Thursday that it was increasing interest rates on its certificates of deposit by 25 basis points.

The Central Bank of Kuwait (CBK) lifted its discount rate by a quarter percentage point to 2.5 percent, effective from today.

The decision takes into account domestic economic, monetary, and banking conditions, as well as “movements in interest rates on major international currencies,” CBK said.

Meanwhile, Bahrain’s central bank raised a range of interest rates by 25 basis points: the key policy interest rate on the one-week deposit facility, the overnight deposit rate, the one-month deposit rate, and the lending rate.