UAE, other Gulf central banks follow Fed to raise key rates

The Central Bank of the UAE (CBUAE) has decided to raise the Base Rate applicable to the Overnight Deposit Facility (ODF) by 75 basis points, effective from Thursday, 16 June 2022.

This decision was taken following the US Federal Reserve Board’s announcement on 15 June 2022 to increase the Interest on Reserve Balances (IORB) by 75 basis points.

The CBUAE also has decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the Base Rate.

The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy. It also provides an effective interest rate floor for overnight money market rates.

The Saudi Central Bank decided to raise the Repurchase Agreement (Repo) rate by 0.5 percent to 2.25 percent from a previous 1.75 per cent, and the Reverse Repurchase Agreement (Reverse Repo) rate by 0.5 percent to 1.75 per cent from a previous 1.25 per cent.

The Central Bank of Bahrain (CBB) decided to raise its key policy interest rate on the one-week deposit facility from 1.75% to 2.50%.

The CBB has also decided to raise the overnight deposit rate from 1.50% to 2.25%, the four-week deposit rate from 2.50% to 3.25% and the lending rates from 3.00% to 3.75%.

• Fed Chairman Powell says rates could be hiked by 0.75 again in July