Fed raises rates, some GCC nations follow suit

The Fed decided to raise interest rates for the first time in nearly a decade on Wednesday. Four Gulf Cooperation Council (GCC) States have raised their interest rates following a historic decision by the United States Federal Reserve.

The organisation increased interest rates for the first time in nine years on Wednesday in the belief that the US economy had largely recovered from the Y’s 2007 to 2009 financial crisis.

It was reported that the UAE central bank raised interest rates on Thursday on its certificates for deposits by 25 bpts.

“Certificates of deposit are the monetary policy instrument used by the UAE central bank through which changes in interest rates are transmitted,” the newswire said. Other central banks in Saudi Arabia, Kuwait and Bahrain made similar moves. Saudi Arabia’s central bank raised its benchmark reverse repurchase rate by 25 to 50 bpts, state news agency SPA reported.

Meanwhile, Bahrain’s central bank said it had decided to raise its Key policy interest rate to 0.50pc from 0.25pc. The rate on its 1-week deposit facility was raised to 0.75pc from 0.50pc. The central bank said it was keeping its repo and lending rates at 2.25pc.

Kuwait’s central bank raised its discount rate by 0.25pc to 2.25pc, State news agency KUNA reported.

The central bank governor reportedly said the decision to raise rates was to guarantee the currency’s competitiveness and attractiveness.

Photo Caption: US Federal Reserve Chair Janet Yellen