The primary interest rates will rise by 75 basis points, with the approval of the central banks of Saudi Arabia, the UAE, and Bahrain. The Saudi Central Bank made the decision to increase the repurchase interest rate (ribo) and repurchase the opposite purchase at the same rate.
The Qatar Central Bank also made the decision to increase interest rates by 50 basis points to 5% starting tomorrow, raising deposit and rebuild (ribo) rates by 75 basis points to 4.5% and 4.75 percent, respectively.
Notably, the majority of Gulf currencies are pegged to the dollar, which forces their central banks to closely follow US Federal Reserve actions.
With Kuwait’s exception, most Gulf banks increased interest rates by about 75 basis points in response to the US federal increase because Kuwait links its currency to a basket of other currencies in addition to the US dollar, as opposed to some Gulf nations that fully link their currencies to the US dollar.
Gulf central banks increase interest rates following the “federal” decision.
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