Qatar stays put after US, Saudi Arabia and UAE hike rates

Saudi Arabia Following the U.S., the United Arab Emirates also raised rates on Wednesday, while Qatar backed away from taking the step.

The Fed decided earlier on Wednesday to raise its key policy rate by 0.25%, citing efforts to bring down inflation.

The Central Bank of Saudi Arabia, the Central Bank of the United Arab Emirates and the Central Bank of Bahrain subsequently announced increases in interest rates by the same percentage, according to separate press releases from the banks.

On the other hand, the Central Bank of Qatar said in a press release on Wednesday that it will keep interest rates unchanged.

Why it matters: Gulf central bank raises interest rates Throughout 2022, in line with the Fed. Qatar’s decision not to raise interest rates may indicate that the Gulf nation is relatively optimistic about the outlook for inflation. Officially, the bank said the decision was motivated by a desire to “support sustainable economic growth”.

Qatar’s inflation rate will fall from 5% to below 2.9% in 2023 due to lower global commodity prices and previous interest rate hikes, New York-based credit ratings agency Fitch said in a report last month.

Qatar’s CPI rose 5.9% YoY in December 2022. The index is used to measure inflation. The Qatari government said the increase was due to the impact of the World Cup, Qatar’s official news agency reported.

Qatar’s decision was somewhat unexpected. Fitch predicts that Qatar will raise interest rates in conjunction with the Fed in early 2023. Qatar, Saudi Arabia and others in December gulf central bank Raise rates with the Fed.

Meanwhile, inflation in Saudi Arabia is rising. Annual inflation rose to 3.3 percent in December from 2.9 percent in November.

In the UAE, the central bank expects inflation to reach 5.6% by the end of 2022. That would be the highest level since 2016, according to Reuters.

understand more: The Central Bank of Kuwait raised interest rates by 0.5% last month. Kuwait’s interest rate decisions are usually made independently and do not necessarily reflect the Fed.