The central banks of Saudi Arabia and the United Arab
Emirates, the region's two largest economies, followed the Fed
in increasing rates by 25 bps, as did Bahrain and Qatar.
The Saudi central bank, known as SAMA, increased its repo
rate by 25 basis points to 5.75% and its reverse repo rate also
by 25bps to 5.25%, it said in a statement, while the UAE central
bank said it would raise the base rate on its Overnight Deposit
Facility to 5.15% from 4.90%.
Bahrain raised all of its key interest rates by 25 bps,
taking the one-week deposit facility rate to 6% from 5.75%.
Qatar increased its repo, lending and deposit rates by 25
bps to 5.75%, 6.0% and 5.5% respectively after initially
releasing a statement maintaining rates; it later posted a new
statement with the upwards revision to rates.
The impact of rising rates on regional credit growth and
non-oil business activity has so far been limited, although
those indicators would probably be a little stronger if rates
were lower, says Justin Alexander, director of Khalij Economics.
"Another 25 bps won't make a big difference; the rates
outlook is more important and it's looking like we might be near
the peak," Alexander, also Gulf analyst at GlobalSource
Partners, said.
(Additional reporting by Rachna Uppal and Muhammad Al Gebaly;
Writing by Rachna Uppal; Editing by Cynthia Osterman)
By Alaa Swilam
CAIRO/DUBAI, May 3 (Reuters) - Most Gulf central banks
increased key interest rates on Wednesday after the U.S. Federal
Reserve raised its target interest rate by a quarter of a
percentage point, in line with expectations.
The Fed raised its rate by 25 basis points on Wednesday, its
10th consecutive increase since March 2022, but signalled it may
pause further increases.
Oil and gas exporters of the Gulf tend to mirror the rate
moves of the Fed as most regional currencies are pegged to the
U.S. dollar.
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.