Following the Fed’s footsteps… Gulf central banks fix interest rates

A number of Gulf central banks decided, on Wednesday, to keep their interest rates unchanged after the Federal Reserve’s decision to fix them.

The Qatar Central Bank announced, on Wednesday, that interest rates would be fixed at their current levels without change for the first time in 2025, after three consecutive rounds of cuts made by the Central Bank during 2024 by a total of 1.15%.

The Qatar Central Bank explained in a statement that it fixed lending interest rates at 5.10%, 4.60% on deposits, and 4.85% on repurchase.

It is noteworthy that the inflation index in Qatar recorded an increase of 0.95% on an annual basis last November – and less than the average for 2024 of 1.13%. While the volume of money supply (M2) at the end of last year reached 718 billion riyals, the lowest level in 14 months.

For its part, the Central Bank of the UAE announced that it has decided to maintain the “base rate” on the overnight deposit facility at 4.40%.

This decision comes after the Federal Reserve announced that it would keep the interest rate on reserve balances unchanged at its meeting held today.

The Central Bank also decided to maintain the rate applicable to borrowing short-term liquidity from the Central Bank through all existing credit facilities at 50 basis points above the base rate.

The base rate, which is linked to the interest rate on reserve balances approved by the US Federal Reserve, determines the overall stance of monetary policy and provides a floor for the effective interest rate for overnight money market rates in the country.