Qatar, UAE, Saudi Arabia raise interest rates after US Federal Reserve

Gulf central banks raised interest rates following yet another rate hike from the US Federal Reserve

The Central Bank of the UAE raised its key policy rates by 0.25%, effective Thursday. The bank cited the Federal Reserve's decision in its statement. 

The Saudi Central Bank also raised its rates by 0.25%, according to a statement. 

The Qatar Central Bank’s Monetary Policy Committee initially said they will keep their key policy rates unchanged in order to “support sustainable economic growth." However, the bank later deleted that statement and announced they raised their key policy rates by 0.25%.

The Central Bank of Bahrain and the Central Bank of Oman also raised rates by 0.25%, according to statements. The Central Bank of Kuwait did not announce a decision. 

Background: The US Federal Reserve raised interest rates by 0.25% on Wednesday, continuing its aggressive response to high inflation in the United States. The rate hikes are controversial due to the pressure they put on the financial system, and have been linked to the collapse of Silicon Valley Bank and Signature Bank earlier this year

Central banks in the Gulf tend to raise interest rates in direct correspondence to the Federal Reserve. In March, Qatar, Saudi Arabia, the UAE, Bahrain and Oman all raised rates, mirroring the Fed’s decision that month.

In February, however, the Qatar Central Bank opted not to raise rates after the Fed’s February rate hike, while other Gulf central banks did. 

Know more: Wednesday’s rate hike by the Federal Reserve could be the last one for the foreseeable future. In its press release, the institution said “additional policy firming may be appropriate” in order to stem inflation. This language resembles the language used when it halted rate hikes in 2006, according to Reuters.

Editor's note: this article was updated to note that Qatar announced an interest rate increase after initially announcing it would not raise rates.