Raising interest in the Gulf, Europe and England

In response to the Federal Reserve (US Central Bank) raising interest rates, Gulf central banks and the European and British central banks also raised interest rates, albeit in varying proportions, with references to the continuation of the future rate hike approach until inflation is brought under control.

The Fed raised interest rates by a quarter of a percentage point on Wednesday night, in a clear reversal of its previous pace, and its chairman, Jerome Powell, for the first time explicitly indicated slowing inflation.

Minutes later, the central banks of Saudi Arabia, the UAE, Bahrain and Oman raised interest rates by a quarter of a percentage point, while Qatar kept its previous rate. The Bank of Kuwait raised interest by half a point a week ago.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said: “The decline in the rate of interest rate hikes is positive for the GCC countries, which did not require such a strong (monetary) tightening cycle.”

On Thursday afternoon, the Bank of England and the European Central Bank announced successively raising interest rates by half a percentage point each, bringing them in the first to 4 percent, and the second to 2.5 percent. It was remarkable that the Bank of England abandoned its pledge to continue to raise interest rates in the future “strongly” if necessary, and said that inflation may have reached its peak. BoJ Deputy Governor Masazumi Wakatabe also indicated that there will be no policy adjustment next month ahead of changes in the bank’s leadership.
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