Gulf Central Banks Hit Pause on Rate Hikes in Tandem With Fed

2023-06-15 02:47

Central banks in the Gulf including Qatar and the United Arab Emirates followed the Federal Reserve’s decision to

Central banks in the Gulf including Qatar and the United Arab Emirates followed the Federal Reserve’s decision to hold interest rates in order to protect their currencies’ peg against the US dollar.

Policymakers in the region generally have little room to maneuver due to the greenback-pegging policy and tend to move in lockstep with the US central bank decisions. The Fed signaled it would likely resume tightening to cool inflation, projecting more increases than economists and investors expected.

Though, cost pressures in the Gulf have been relatively muted in comparison to the US.

Read: Fed Pauses Rate Hikes But Signals More Tightening to Come

Qatar said it would keep its repo rate unchanged at 5.75%, its lending rate at 6% and its deposit rate at 5.5%
The UAE maintained its base rate applicable to the overnight deposit facility at 5.15%

--With assistance from Zaid Sabah.