The Gulf reserve banks’ steps followed the US Federal Reserve increasing its prices. Inflation boosted in both Qatar and also Saudi Arabia at the end of 2022.
Saudi Arabia as well as the United Arab Emirates raised rates of interest on Wednesday following the United States, while Qatar abstained from taking such action.
The US Federal Reserve earlier on Wednesday chose to elevate its crucial policy rate by 0.25%, citing initiatives to lower rising cost of living.
The Saudi Reserve Bank, the Reserve bank of the UAE and the Central Bank of Bahrain subsequently revealed they would certainly raise their rates by the very same percentage, according to different news release from the financial institutions.
The Qatar Reserve Bank, on the other hand, stated in a press release Wednesday that it would keep its rates the same.
Why it matters: Gulf central banks increased interest rates several times throughout 2022 in maintaining with the Federal Reserve. Qatar’s decision to not elevate prices can show the Gulf state has a fairly bullish expectation on rising cost of living. The bank officially claimed the decision was encouraged by a wish to “sustain sustainable financial development.”
The New York-based credit rating ratings agency Fitch claimed in a record last month that inflation in Qatar would certainly reduce from 5% to below 2.9% in 2023 because of reduced worldwide commodity rates and the previous interest rate walkings.
Qatar’s consumer price index increased by 5.9% on the year in December 2022. This index is used to gauge inflation. The Qatari government claimed the surge was because of the effects of the Globe Cup, according to the official Qatar News Firm.
Qatar’s choice came rather as a shock. Fitch forecasted that Qatar would raise prices along with the Fed in early 2023. In December, Qatar, Saudi Arabia and various other Gulf central banks increased prices along with the Fed.
Meanwhile, rising cost of living gets on the increase in Saudi Arabia. Annual inflation raised to 3.3% in December, up from 2.9% in November.
In the UAE, the Central Bank predicted inflation would certainly get to 5.6% by the end of 2022. This would certainly be the highest rate given that 2016, according to Reuters.
Know extra: The Central Bank of Kuwait increased its rate of interest by 0.5% last month. Kuwait often acts separately on its rates choices as well as does not necessarily mirror the Federal Get.
Last Updated: 02 February 2023
