Gulf central banks lifted key interest rates on Wednesday, matching a quarter-point increase from the U.S. Federal Reserve. Saudi Arabia, the UAE and Oman all raised their benchmark rates by 25 basis points, a move tied to their currencies' peg to the dollar.
Central banks across the Gulf Cooperation Council raised their key interest rates on Wednesday after the Federal Reserve increased its own rate by a quarter of a percentage point.
The Saudi Arabian Monetary Authority lifted its repurchase agreement rate by 25 basis points to 4.50% and raised its reverse repo rate by the same margin to 4.00%. Saudi Arabia is the world's largest oil producer and the biggest economy in the region, so its rate path sets the tone for its neighbors.
The United Arab Emirates raised the base rate on its overnight deposit facility by 25 basis points to 3.9%. Oman's central bank followed with an identical 25 basis point increase, taking its repo rate to 4.5%.
Most Gulf oil and gas exporters typically adjust their rates in line with the Fed because their currencies are pegged to the U.S. dollar. Kuwait is the exception, as the Kuwaiti dinar is pegged to a basket of currencies that includes the dollar.
Source: Investing.com
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