Central banks in the Middle East also moved quickly after the U.S. Federal Reserve announced its biggest interest rate hike in nearly three decades.
Bahrain’s central bank raised its one-week deposit rate, a key policy rate, by 75 basis points to 2.25% on Wednesday, June 15.
The overnight deposit rate was raised by the same amount to 2.25%, the four-week deposit rate to 3.25% from 2.5%, and the lending rate to 3.75% from 3.0%.
While matching the fed’s rate hike announced earlier in the day, bahrain’s move surprised markets as it had been widely expected to raise rates by 50 basis points.
Bahrain’s central bank said it ‘will continue to monitor the situation in global and local markets to determine whether and what actions are necessary to maintain monetary and financial stability.’
Also on Wednesday, the Central bank of the United Arab Emirates raised interest rates by 75 basis points, with the benchmark rate on overnight deposits linked to the Federal Reserve Reserve Balances (IORB) rising by 75 basis points from Thursday.
The Saudi Monetary Authority (SAMA), the equivalent of a central bank, on Wednesday raised the repurchase rate by 50 basis points to 2.25 per cent from 1.75 per cent and the reverse repurchase rate to 1.75 per cent from 1.25 per cent.
SAMA said the move was consistent with its goal of maintaining monetary and financial stability, given the changing domestic and international situation.
Also on Wednesday, Kuwait’s central bank raised its discount rate by 25 basis points from 2.00% to 2.25%.Kuwait’s dinar is pegged to a basket of currencies, including the DOLLAR.Kuwait said it had more flexibility in its interest rate policy to track a basket of currencies.