Some Gulf central banks have occasionally deviated from the Fed, as inflation in the region did not reach levels seen in the U.S. The Fed's move on Wednesday set its benchmark overnight interest rate in the 4.75%-5.00% range, but the U.S. central bank indicated it was on the verge of pausing further increases amid recent turmoil in financial markets spurred by the collapse of two U.S. banks. The Saudi Central Bank, also known as SAMA, on Wednesday raised its repo and reverse repo rates by 25 basis points (bps) each to 5.5% and 5%, respectively. The Central Bank of the UAE also raised its base rate by 25 bps to 4.9%, state news agency WAM said. The Central Bank of Qatar increased its deposit, lending and repo rates by 25 bps to 5.25%, 5.75% and 5.5%, respectively. Qatar had kept its rates unchanged in February after the Fed increased its rates target, also by 25 bps. The Central Bank of Bahrain also raised its rates by 25 basis points on Wednesday, including its key policy rate on its one-week deposit facility. On Tuesday, Monica Malik, chief economist at Abu Dhabi Commercial Bank, said in a note that supportive "oil prices, rising economic confidence and a focus on domestic development plans have meant that the GCC economies have been able to absorb higher rates," referring to the six-nation Gulf Cooperation Council. Brent crude was trading around $75.8 on Wednesday, a roughly one-week high. ADCB reduced its forecast for Brent for the year to $89.6 per barrel from a prior estimate of $95. (Reporting by Yousef Saba; Editing by David Gregorio)
By Yousef Saba
DUBAI, March 22 (Reuters) - Most Gulf central banks
lifted their rates by a quarter percentage point on Wednesday,
mirroring the U.S. Federal Reserve's rate hike as their
currencies are largely pegged to the dollar.
The Gulf central banks have largely followed each rate hike
by the Federal Reserve over the last year as it fought to tame
inflation with the most aggressive tightening cycle since the
1980s.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.