Skip to main content

Explainer: Oman may follow as most Gulf central banks raise rates

Inflation in the Gulf has not been as severe as in other parts of the region.

In response to the US Federal Reserve raising interest rates, most central banks in the Gulf followed suit Wednesday.

The Fed raised its interest rates by 0.5% — the largest hike in more than 20 years — to 0.75%. The move was a response to rising inflation in the United States. Here’s how Gulf monetary institutions responded, and what it means.

Saudi Arabia

The Saudi Central Bank raised its repo rate by 0.5% to 1.75% and its reverse repo rate by 0.5% to 1.25%. 

The repo rate refers to the interest rate on central bank purchases of securities such as bonds from commercial banks. The reverse repo rate is the rate at which the central bank borrows from commercial banks. 


The Qatar Central Bank raised its deposit rate by 0.5% to 1.5%, its lending rate by 0.25% to 2.75% and its repo rate by 0.5% to 1.75%. 

The deposit rate is the interest rate banks pay on the cash deposits of account holders. The lending rate is simply the rate a bank charges for loaning money. 

United Arab Emirates

The Central Bank of the UAE raised its overnight deposit rate by 0.5%, making the rate 2.25%. The overnight deposit rate refers to the rate at which banks loan to other banks after normal business hours. 


The Central Bank of Bahrain raised its interest rate 0.5% to 1.75%. It also raised its overnight deposit rate to 0.5% to 1.5%, the four-week deposit rate 0.75% to 2.5% and the lending rate 0.5% to 3%. 


The Central Bank of Kuwait raised its discount rate 0.25% to 2%. The discount rate refers to the interest rate charged to commercial banks for loans from the central bank. 

Oman and war-torn Yemen did not immediately raise rates, though Reuters reported Wednesday that Oman is “widely expected” to do so soon. 

Why it matters:  Central banks around the world tend to raise their rates in response to the Federal Reserve’s actions. Some Gulf banks raised their rates in March, the last time the Fed hiked rates. 

Saudi Arabia, the UAE, Qatar and Bahrain all raised rates by the same amount as the Federal Reserve, though Kuwait did so by a smaller margin. Reuters called this a “less hawkish” move that could reflect Kuwait being relatively less concerned about inflation. 

Higher bank rates tend to encourage saving and discourage spending, thus reducing the money supply in the country and therefore inflation. 

Inflation is rising around the world, including in Gulf states, though inflation in the region is not nearly as bad as it is in other parts of the Middle East, such as Turkey

What’s next:  The Federal Reserve plans to raise rates several more times throughout the year. 

Join hundreds of Middle East professionals with Al-Monitor PRO.

Business and policy professionals use PRO to monitor the regional economy and improve their reports, memos and presentations. Try it for free and cancel anytime.

Already a Member? Sign in


The Middle East's Best Newsletters

Join over 50,000 readers who access our journalists dedicated newsletters, covering the top political, security, business and tech issues across the region each week.
Delivered straight to your inbox.


What's included:
Our Expertise

Free newsletters available:

  • The Takeaway & Week in Review
  • Middle East Minute (AM)
  • Daily Briefing (PM)
  • Business & Tech Briefing
  • Security Briefing
  • Gulf Briefing
  • Israel Briefing
  • Palestine Briefing
  • Turkey Briefing
  • Iraq Briefing

Premium Membership

Join the Middle East's most notable experts for premium memos, trend reports, live video Q&A, and intimate in-person events, each detailing exclusive insights on business and geopolitical trends shaping the region.

$25.00 / month
billed annually

Become Member Start with 1-week free trial
What's included:
Our Expertise

Memos - premium analytical writing: actionable insights on markets and geopolitics.

Live Video Q&A - Hear from our top journalists and regional experts.

Special Events - Intimate in-person events with business & political VIPs.

Trend Reports - Deep dive analysis on market updates.

We also offer team plans. Please send an email to and we'll onboard your team.

Already a Member? Sign in