The UAE, Saudi Arabia, and Bahrain all increased their policy rate by 25 basis points (0.25 percent), following the Fed decision.ulf central banks raised their base interest rates on Wednesday after the US Fed increased interest rates.The central banks of the region have pegged their respective currencies to the US dollar, meaning that when the US Fed increases or decreases rates, the region follows.The UAE, Saudi Arabia, and Bahrain all increased their policy rate by 25 basis points (0.25 percent), following the Fed decision. The US central bank said it had been increasing rates in a bid to combat inflation.Earlier on Wednesday, the UAE also decided to increase the overnight deposit facility by 25 basis points, from 4.4 percent to 4.65 percent, effective from today, Thursday.The increase in base rates is the highest interest rate the US has hit since the 2008 financial crisis.Central banks use the interest rate as a lever to control the overall economy, by raising interest rates, the central bank hopes to put the brakes on inflation and slow economic activity.Inflationary fears ran rampart last year as the global economy experienced significant supply chain shortages following the Covid-19 pandemic. Raising interest rates is one way of slowing down inflation by making it more expensive to borrow money.In Saudi Arabia, the kingdom’s minister of finance, Mohammed Al-Jadaan said in December that inflation for 2022 was estimated to hit 2.6 percent, and is forecast at 2.1 percent in 2023.Meanwhile, in the UAE, inflation hit around 4.9 percent in 2022, according to the central bank’s Quarterly Economic Review 2022. These figures compare to an 8.8 percent global inflation rate, according to the IMF, demonstrating the region’s resilience and buoyancy in the face of global economic headwinds. (ICE DUBAI)

Fonte notizia: https://www.arabianbusiness.com/industries/banking-finance/uae-saudi-bahrain-central-banks-raise-int