Gulf Central Banks Hold Rates Following US Federal Reserve Decision

The Central Bank of Bahrain and other Gulf monetary authorities held interest rates steady on Wednesday, mirroring a decision by the US Federal Reserve to leave its Interest Rate on Reserve Balances unchanged. The Central Bank of Bahrain maintained its overnight deposit interest rate at 4.5% to ensure monetary and financial stability amid global market volatility.

Similar actions were taken across the region. The Central Bank of the UAE kept its base rate for overnight deposit facilities at 3.9% and maintained the borrowing rate for short-term liquidity at 50 basis points above that base rate. Meanwhile, the Qatar Central Bank held its deposit rate at 4.10%, its lending rate at 4.60%, and its repurchase rate at 4.35%.

These regional decisions are closely tied to US policy, as the UAE's base rate is anchored to the Federal Reserve's rates. Federal Reserve Chair Kevin Warsh noted that financial conditions have tightened since a rate hike in September. Following the Federal Reserve's announcement, the S&P 500 climbed 0.28%.