Saudi Arabia, Kuwait, Bahrain, UAE, Qatar, Jordan, Hong Kong, Macao cut rates 25 bps

    The eight central banks of Saudi Arabia, Bahrain, Kuwait, Qatar, the United Arab Emirates, Jordan, Hong Kong and Macao lowered their benchmark interest rates by 25 basis points, tracking their U.S. Federal Reserve's similar-sized cut in its federal funds rate.
     The Saudi Arabian Monetary Authority (SAMA) cut its repurchase rate and the reverse repo rate by 25 basis points to 2.25 percent and 1.75 percent, respectively.
     It is the third cut by SAMA this year, mirroring the Fed's three rate cuts in July, September and today.
    The Central Bank of Bahrain (CBB) cut its key policy rate, the one-week deposit facility rate, to 2.25 percent, the overnight deposit rate to 2.0 percent, the one-month deposit rate to 2.60 percent and the lending rate to 4.0 percent.
     It is CBB's second rate cut this year, with the rate being cut in July and today, but not in September.
     Saudi Arabia, Bahrain, UAE, Qatar and Jordan peg their currencies to the U.S. dollar while Kuwait's dinar is linked to a basket of currencies, including the dollar.
     The Central Bank of Kuwait (CBK) lowered its discount rate by 25 basis points to 2.75 percent, its first change in rates since a hike in March 2018. It is the first rate cut since October 2012.
     CBK said the decision fulfills the dual objective of promoting non-inflationary economic growth and ensuring the attractiveness of the national currency.
     "A healthy margin in favor of the KWD against the USD allowed for a discount rate cut that maintains the attractiveness of the national currency," Governor Mohammad Y. Al-Hashel said, adding the lower lending cost should drive credit take-off, motivate demand and support non-oil growth.
    The Qatar Central Bank cut its three main rates by 25 basis points, lowering the benchmark lending rate (QCBLR) to 4.25 percent, the deposit rate (QCBDR) to 2.0 percent and the repurchase rate to 2.0 percent, "taking into account the evolving domestic and international macroeconomic developments."
    The Central Bank of Jordan (CBJ) also cut interest rates on its monetary policy instruments by 25 basis points, saying this was "in response to the recent trends in the interest rates in the regional and international markets, and the positive outcomes witness by the Jordanian balance of payments, particularly national exports, tourism receipts and the continues flow of workers's remittances, which contributed positively to foreign reserves."
    The CBJ's main rate now stands at 4.0 percent, the re-discount rate at 5.0 percent, the overnight deposit window rate at 3.25 percent and the rate on repurchase agreements at 4.75 percent.
    CBJ added the rate cut was also aimed at catalyzing growth of credit and promote domestic spending, both consumption and investment, which should have a positive effect on economic growth.
    CBJ left its rate on its refinancing program that targets small and medium sized projects at 1.75 percent for projects in Amman and for 1.0 percent for projects in other areas.
     This program has provided funds for 1,125 projects at a total investment of 760 million Jordanian dinars, helping create some 11,200 new jobs, CBJ said.
     The Central Bank of United Arab Emirates (CBUAE) also said it would lower the rate on its certificates of deposits and the repurchase rate on short-term borrowing liquidity by 25 basis points in line with the Fed's decision.
     CBUAE's deposit rate is its main instrument for transmitting monetary policy to the banking system and the rate now stands at 2.50 percent.
     The rate cuts by central banks in the Mideast were later followed by the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Macao (AMCM), both of which lowered their benchmark rates by 25 basis points to 2.0 percent, respectively.
    The Hong Kong dollar is pegged to the U.S. dollar and Macao's pataca is linked to the Hong Kong Dollar.

    www.CentralBankNews.info

Kuwait holds as Saudi, Qatar, UAE, HK, Macau raise rates

     Most countries that link their currency to the U.S. dollar raised interest rates in the wake of the Federal Reserve's 25-basis-point rate hike with the exception of Kuwait.
     Hong Kong's de-facto central bank, the Hong Kong Monetary Authority (HKMA), raised its base rate by 25 basis points to 2.25 percent while the Monetary Authority of Macau (AMCM), whose pataca is linked to the Hong Kong dollar, raised its base rate on the discount window by 25 points to 2.25 percent.
     The Saudi Arabian Monetary Agency (SAMA) raised the rate on both its repurchase and reverse repurchase agreements by 25 basis points to 2.50 percent and 2.0 percent, respectively, while the Qatar Central Bank (QCB) raised its deposit rate (QCBDR by 25 points to 2.0 percent and the Central Bank of the UAE raised its deposit and repo rates by the same amount.
     However, the Central Bank of Kuwait (CBK) said in a statement that it was maintaining its discount rate at 3.0 percent "based on thorough data analysis."
     So far there has been no statements of rate changes by the Central Bank of Bahrain, whose one-week deposit rate typically tracks U.S. rates, nor by the Central Bank of Oman.
     The Central Bank of Jordan (CBJ), whose dinar has been fixed to the U.S. dollar since 1995, has also not issued any statement.
      In March, when the Fed previously raised its rate, CBJ raised its rates on March 25 following the Fed's hike on March 21.

      www.CentralBankNews.info

 

Macau raises rate 25 bps as it tracks HK rate hike

      Macau, the small peninsula known for its giant casinos and shopping malls, raised its benchmark discount rate by 25 basis points to 2.0 percent, tracking Hong Kong's rate hike.
      Macau's de-facto central bank, the Monetary Authority of Macao (AMCM), said as its pataca currency is linked to the Hong Kong dollar, changes in policy rates in Hong Kong and Macau should be consistent in order to maintain the linked exchange rate system.
      Earlier today the Hong Kong Monetary Authority (HKMA) raised its base rate by 25 basis points to 2.0 percent in response to the U.S. Federal Reserve's 25-point rate hike on March 21. The Hong Kong dollar is pegged to the U.S. dollar.
      AMCM said local market interest rates would gradually move up this year in view of the external and financial market developments and it wants to remind the public that higher mortgage rates will increase the financial burden of borrowers, "hence, those that rely on mortgages for property purchases should prudently assess their repayment ability."
       "Meanwhile, local banks should assess the impacts of interest-rate adjustments on their operating positions and properly manage the potential risk," AMCM added.
      Macau was part of Portugal until 1999 when it became an autonomous region of China, under the same "one country, two systems" policy that saw Hong Kong revert back to China in 1997. Macau is only 62 kilometers from Hong Kong.
      Under the agreement between Portugal and China, Macau is guaranteed its own monetary and legal system until 2049.

       www.CentralBankNews.info

China raises 7-day repo rate 5 bps, HK raises base rate

      China raised its 7-day reverse repurchase rate, used for money market operations, by 5 basis points to 2.55 percent, saying this was in line with market expectations and "a normal reaction" to the U.S. Federal Reserve's increase of its key interest rate on March 21.
       But the People's Bank of China (PBOC) again left its benchmark one-year lending rate at 4.35 percent. This rate was last cut in October 2015.
       Hong Kong's central bank, the Hong Kong Monetary Authority (HKMA), also raised its base rate by 25 basis points to 2.0 percent in response to the Fed's 25 point increase in its fed funds rate to 1.50 - 1.75 percent.
        Hong Kong's monetary policy tracks that of the U.S., with the Hong Kong dollar trading in a band of 7.75 - 7.85 to the U.S. dollar. In recent months the Hong Kong dollar has come under pressure as the spread between Hibor, the local lending rate,  and Libor has widened due to an abundance of liquidity in the banking system.
       The PBOC's rate increase comes days after the National People's Congress (NPC) named Yi Gang as successor to Governor Zhou Xiaochuan, who has been at the helm of the PBOC since 2002. 
      Yi, deputy governor of PBOC, joined the PBOC in 1997 after first earning a business degree at Hamline University in Minnesota, then a Ph.D in economics at the University of Illinois before joining the University of Indianapolis as professor in 1986.
       In 2017 the PBOC raised various short- and medium-term rates four times, with two of the increases following Fed rate hikes in March and December. However, it did not change rates following the Fed's rate hike in June.
       The rate on the the PBOC's 7-day reverse repo rate was last raised on Dec. 14, 2017 -  in line with the Fed's rate hike on Dec. 13 - by 5 basis points to 2.50 percent. A few days later the 14-reverse repo rate was raised to 2.65 percent from 2.60 percent.
       In a statement on its website, PBOC said the interest spread between China and the U.S. will help guide the relationship of open market rates to currency rates, and help market players form interest rate expectations and "restrict irrational financial behavior," stabilizing leverage ratios.
       Since the beginning of this year, the PBOC said it had stepped up the fine-tuning and anticipatory open market operations to maintain stable, moderately flexible liquidity in the banking system, and to guide the rational growth of money and credit.
       The combination with a slight upward movement of open market interest rates is conducive to supply, the PBOC added.
       Analysts expect the PBOC to raise its reverse repurchase rates several times this year as it attempts to deleverage the economy but then also lower the reserve requirement rate from 17 percent to support smaller businesses.
       China has been tightening up its regulatory structure in recent years to better control shadow financing and reduce the risks in the financial system while still maintaining economic growth.
       The gradual increase in interest rates is also aimed at squeezing asset bubbles and curbing the growth of debt

       Last week the NPC changed some of China's financial regulatory structure, merging its banking and industry regulatory commissions into one group and giving the PBOC the power to draft key regulations and prudential oversight. 

      www.CentralBankNews.info

 

HK, Saudi, UAE, Bahrain raise rates but Kuwait on hold

     The central banks of Hong Kong, Saudi Arabia,  the United Arab Emirates (UAE) and Bahrain raised their key interest rates by 25 basis points, tracking a similar rate hike earlier today by the U.S. Federal Reserve.
      However, the Central Bank of Kuwait (CBK) left its benchmark discount rate at 2.75 percent and would continue to employ tools and procedures to maintain the attractiveness of its dinar.
      While Kuwait pegs its dinar to a weighted basket of currencies, the other five members of the  Gulf Cooperation Council (GCC) - Saudi Arabia, Bahrain, Oman, the UAE and Qatar - peg their currencies to the U.S. dollar and normally adjust their rates in synch with the U.S central bank.
     The Hong Kong Monetary Authority (HKMA), the de-facto central bank of Hong Kong, also pegs its Hong Kong dollar to the U.S. dollar and tracks changes to U.S. rates.
      The HKMA adjusted upward its base rate by 25 basis points to 1.50 percent with immediate effect following the 25-basis-point upward shift in the target range for the U.S. federal funds rate.
      The Central Bank of the UAE (CBUAE) said it would raise its rate on certificates of deposit - the key policy instrument through which changes are transmitted to the UAE banking system - by 25 basis points.
      The Saudi Arabia Monetary Authority (SAMA) raised its reverse repo rate to 1.25 percent from 1.00 percent with immediate effect while it kept the repo rate at 2.00 percent, in line with recent developments in international financial markets.

     www.CentralBankNews.info

 

Kuwait, UAE hike rates as they track U.S. rate hike

    The central banks of Kuwait and the United Arab Emirates (UAE) were quick off the mark in raising their benchmark interest rates following a 25-basis point rate hike by the U.S. Federal Reserve.
    Five of the six members of the Gulf Cooperation Council (GCC), a regional political and economic grouping of oil exporters, peg their currencies to the U.S. dollar and normally adjust their key interest rates in sync with that of the Fed.
    Kuwait's dinar is pegged to a weighted based of currencies, including both the dollar and the euro.
    The Hong Kong Monetary Authority (HKMA) also pegs its dollar to the U.S. dollar and also tracks  U.S. rate changes.
    In addition to Kuwait (CBK) and the UAE, the GCC includes Saudi Arabia, Bahrain, Oman and Qatar. In December last year, when the Fed raised its rate for the second time since the global financial crises in 2008-2009, all GCC members quickly raised their rates, except for Oman.
    The Central Bank of Kuwait (CBK) said in statement that it had raised its discount rate by 25 basis points to 2.75 percent as of March 16, to "maintain the competitive and attractive returns on domestic KD savings compared with those of the major International currencies, particularly after the announcement by the US Federal Reserve to raise the interest rates as of March 15, 2017."
    The Central Bank of the UAE (CBUAE) said in its statement that it would raise the rates on its certificates of deposit by 25 basis points "in line with the increase in interest rates on US dollar, following the Federal Reserve Board's decision to increase the Federal Funds rate by 25 basis points at its meeting of today."
    The CBUAE's deposit rate will be raised to 1.75 percent as of March 16 while the repo rate will be raised by 25 basis points to 1.25 percent.

    www.CentralBankNews.info

 
 

Hong Kong raises base rate 25 bps following Fed hike

    The Hong Kong Monetary Authority (HKMA), the de-facto central bank of Hong Kong, raised its base rate by 25 basis points to 0.75 percent following the U.S. Federal Reserve's rate hike.
    The HKMA has a fixed peg exchange rate system to the U.S. dollar and sets the base rate 50 basis points above the target of the U.S. federal funds rate or the average of the overnight and one-month Hong Kong Interbank Offered Rates, whichever is the higher.
     Hong Kong's peg to the U.S. dollar has been called into question by many observers as China's yuan gains growing international use and someday will be fully convertible.
    The Hong Kong dollar was trading at 7.75 to the U.S. dollar today.