Thursday, March 22, 2018

Bahrain raises key rate 25 bps, Qatar raises deposit rate

       Bahrain and Qatar's central bank joined other central banks that peg their currencies to the U.S. dollar and raised their policy rate by 25 basis points following the U.S. Federal Reserve's much-anticipated increase of its benchmark federal funds rate by 25 basis points to 1.50 - 1.75 percent.
       The Central Bank of Bahrain (CBB) raised the interest rate on its one-week deposit facility by 25 basis points to 2.0 percent.
       CBB also raised its overnight deposit rate to 1.75 percent from 1.50 percent, the one-month deposit rate to 2.65 percent from 2.40 percent and the lending rate to 3.75 percent from 3.50 percent.
       But while the Qatar Central Bank (QCB) raised its deposit rate by 25 basis points to 1.75 percent, it maintained the benchmark lending rate at 5.0 percent and the repurchase rate at 2.50 percent, saying the changes took into account the "evolving domestic and international macroeconomic developments."
       The Fed's rate hike on Wednesday was closely followed with rate hikes by the central banks of Kuwait and the United Arab Emirates.
       However, last week Saudi Arabia and Oman last week raised their rates.
       Bahrain, Qatar, Saudi Arabia, Oman, Kuwait and the UAE are members of the Gulf Cooperation Council (GCC), with their currencies pegged to the U.S. dollar.



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