Gulf central banks raise rates as U.S. Fed lifts to 75 bps | Reuters

Gulf central banks raise rates as U.S. Fed lifts to 75 bps | Reuters

Most Gulf central banks followed the U.S. Federal Reserve on Wednesday, lifting their key interest rates by three-quarters of a percentage point, while Saudi Arabia made a smaller hike after the latest data showed inflation there slowing slightly.

The U.S. central bank projected a slowing economy and rising unemployment in the United States in the months to come after raising its interest rate by its biggest hike since 1994.

The Gulf Cooperation Council (GCC) countries have their currencies pegged to the U.S. dollar, except Kuwait.

The Saudi Central Bank lifted its repo and reverse repo rates by 50 basis points (bps) to 2.25% and 1.75%, respectively. Saudi inflation edged down to 2.2% in May from 2.3% in April.

The Central Bank of Kuwait raised its discount rate by 25 bps to 2.25%. Its peg to a basket, the composition of which is undisclosed, gives it more room to diverge from Fed policy if domestic economic conditions call for that.