GCC central banks hold rates after Fed keeps benchmark unchanged

RIYADH: Central banks in the UAE, Qatar and Bahrain have kept interest rates unchanged, following the US Federal Reserve’s decision to hold its benchmark rate steady.

The Fed’s rate-setting committee voted 10-2 to keep its benchmark rate in the 3.75 to 4 percent range.

Gulf central banks tend to 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 Committee is continuing its policy of maintaining ample reserves in the banking system,” the Federal Open Market Committee said in its statement.

The committee said economic activity continued to expand at a strong pace, supported by resilient domestic spending, robust capital investment and strong productivity growth.

However, uncertainty remained elevated, partly due to geopolitical developments, while the unemployment rate was little changed.

GCC central banks follow

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’s announcement that it was holding the interest rate on reserve balances unchanged.

The 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 bank said the QCB Deposit Rate remains at 4.10 percent, the QCB Lending Rate at 4.60 percent and the QCB Repo Rate at 4.35 percent.

The Central Bank of Bahrain announced it was maintaining the overnight deposit interest rate at 4.50 percent.

The CBB said the decision was part of its review to maintain monetary and financial stability in the kingdom in light of global financial market developments.

The central banks of Saudi Arabia, Kuwait and Oman are yet to announce any new rate decisions.