Most Gulf central banks increased their key interest rates on Wednesday after the Federal Reserve raised rates by an expected quarter of a percentage point, citing still-elevated inflation as a rationale for the latest hike, SİA reports citing Reuters.
The Fed raised its rate by 25 basis points (bps) on Wednesday and left the door open to another increase.
Oil and gas exporters in the Gulf tend to follow the Fed's lead on rate moves as most regional currencies are pegged to the U.S. dollar; only the Kuwaiti dinar is pegged to a basket of currencies, which includes the dollar.
However, regional economies have been largely shielded from stubbornly high inflation, and a Reuters poll in April showed that inflation in the region was expected to be between 2.1% and 3.3% this year and fall lower in 2024.
The central banks of Saudi Arabia and the United Arab Emirates mirrored the Fed move, as did Qatar, Kuwait and Bahrain, although the latter left two rates out of four unchanged.
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