Saudi Arabia only partially matched the US Federal Reserve’s biggest interest-rate increase since 1994, but it was enough for the kingdom to become only the third major economy with official borrowing costs above zero when adjusted for prices.
The world’s largest oil exporter largely moves in lockstep with the US to protect its currency peg to the dollar. On Wednesday, its central bank raised the repo rate by half a percentage point to 2.25%, compared with the Fed’s 75-basis-point increase.
With the decision, Saudi Arabia joins China and Brazil in having a positive real rate. Neighboring Gulf countries including Kuwait and Qatar also didn’t follow the Fed in full.
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