Central banks in the United Arab Emirates, Qatar and Bahrain announced they were keeping their interest rates unchanged. The decisions followed the US Federal Reserve’s choice to hold its benchmark rate steady.
The US Federal Open Market Committee voted 10-2 to maintain its benchmark rate within the 3.75 to 4 percent range. Gulf central banks typically move in step with Washington because most regional currencies are pegged to the US dollar.
The Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, in support of the Federal Reserve’s dual mandate, the rate-setting committee said in an official statement. The committee is continuing its policy of maintaining ample reserves in the banking system.
Economic activity continued to expand at a strong pace, supported by resilient domestic spending, robust capital investment and strong productivity growth, according to the Fed statement. Uncertainty was elevated, partly due to geopolitical developments, while the unemployment rate was little changed.
The Central Bank of the UAE kept its base rate on the overnight deposit facility at 3.9 percent. It said the decision followed the Fed announcement that it was holding the interest rate on reserve balances unchanged.
The UAE central bank also maintained the rate on short-term liquidity borrowing through all existing credit facilities at 50 basis points above the base rate. Qatar Central Bank decided to maintain its deposit, lending and repo rates after assessing the country’s current monetary policy.
In a post on its official X account, the Qatar Central Bank said the deposit rate is 4.10 percent, the lending rate is 4.60 percent and the repo rate is 4.35 percent.
The Central Bank of Bahrain announced it was maintaining the overnight deposit interest rate at 4.50 percent. The bank said the decision was part of its review to maintain monetary and financial stability in the kingdom given global financial market developments.
Other member states including Saudi Arabia, Kuwait and Oman are yet to announce any new rate decisions.
