Saudi, UAE, Bahrain central banks raise interest rates following Fed rate hike

The central banks of Saudi Arabia, UAE, and Bahrain have increased the benchmark interest rates on Wednesday after the US Federal Reserve Open Market Committee (FOMC) voted to raise interest rates by 25bps.

“SAMA has decided to raise its repo rate from 275 basis points to 300 basis points and the reverse repo rate from 225 basis points to 250 basis points with immediate effect,” Saudi Arabia’s central banks said in a statement.

The UAE Central Bank also said in a statement it would raise interest rates applied to the issuance of its Certificates of Deposits, effective Dec. 20, 2018.

“The repo rate applicable to borrowing short-term liquidity from CBUAE against Certificates of Deposits has also been increased by 25 basis points,” the central bank said in a statement.

The Central Bank of Bahrain also raised its key policy interest rate on the one-week deposit facility from 2.50 percent to 2.75 percent with immediate effect. 

The CBB also decided to increase the overnight deposit rate from 2.25 percent to 2.50 percent, the lending rate from 4.25 percent to 4.50 percent while the one-month deposit rate will remain the same at 3.25 percent, it said in a statement on Wednesday.

The Central Bank of Kuwait, however, decided to maintain the discount rate unchanged at its current level of 3 percent.