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UAE, Kuwait, Bahrain increase rates after Fed hike

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UAE, Kuwait, Bahrain increase rates after Fed hike

The central banks of at least three Persian Gulf countries raised interest rates following the U.S. Federal Reserve's rate hike.

The Central Bank of the United Arab Emirates said that effective March 22, the repo rate applicable to borrowing short-term liquidity from the bank against certificates of deposit will go up by 25 basis points to 2%.

The Central Bank of Kuwait lifted its discount rate to 3% from 2.75%, also effective March 22. In December 2017, it stood pat on the rate despite that month's Fed rate hike.

The Central Bank of Bahrain said it was raising policy interest rates by 25 basis points, with the one-week deposit facility rate rising to 2.00% and the overnight deposit rate increasing to 1.75%, Reuters reported. The one-month deposit rate and lending rate climbed to 2.65% and 3.75%, respectively.

Last week, ahead of the latest Fed meeting, the Saudi Arabian Monetary Authority increased its repo rate to 225 basis points from 200 basis points and the reverse repo rate to 175 basis points from 150 basis points.

The Fed earlier raised its benchmark interest rate, the first raise under Chairman Jerome Powell, and signaled that it was still penciling in three rate hikes in 2018.