Skip to main content

Israel raises interest rates, following Gulf, US

Inflation is rising throughout the Middle East and many countries' central banks are raising interest rates in response.
Traders work on the floor of the New York Stock Exchange on June 15, 2022.

The Bank of Israel raised its main interest rate 0.5% on July 4 to 1.25% in a bid to fight inflation and rising housing costs. 

The move follows the central bank raising rates 0.4% in May, which was the largest hike since 2011. Inflation reached 4% in April, which is also the highest level in a decade. The Bank of Israel cited effects of the Russian invasion of Ukraine and a manufacturing slowdown in China as reasons for the action. 

This comes after the US Federal Reserve raised its rate by 0.75% on June 15. The next day in response, several Gulf central banks raised their policy rates.

The Central Bank of the United Arab Emirates raised its overnight deposit rate 0.75%. This rate applies for the UAE Central Bank’s loans to other banks. 

The Qatar Central Bank raised its deposit and repo rates by 0.75% and its lending rate by 0.5%, the bank said in a press release. The deposit rate is the rate the bank pays interest to customers, while the repo rate is the rate on central bank purchases of securities — such as bonds — from commercial banks. The lending rate is the rate for loans to other banks. 

The Saudi Central Bank raised its repo and reverse repo rates by 0.5%, the Saudi news outlet Arab News reported. The reverse repo rate is the rate for central banks to borrow from commercial banks. 

Later in June, the Central Bank of Bahrain raised several of its interest rates 0.75% to mirror the Fed and the Kuwait Central Bank raised its discount rate by only 0.25%. This rate could refer to the interest rate for short-term loans taken out by commercial banks from the central bank. 

The US Federal Reserve’s actions usually have an influence on monetary policy in the Middle East and throughout the world. Gulf central banks also raised their rates in March and May in response to the Fed. More Middle Eastern central banks could follow soon.

Note: this article was updated to include reporting on Bahrain, Kuwait, and Israel's interest rate hikes. 

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

Free

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.

Free

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
Expert

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 pro.support@al-monitor.com and we'll onboard your team.

Already a Member? Sign in