Gulf States Match Fed With Quarter-Point Interest Rate Increase

Fed Raises Rates to Highest Level in 22 Years

Central banks in the Gulf including in Kuwait and Saudi Arabia matched the Federal Reserve’s 25 basis-point rate increase on Wednesday as they aim to protect their currencies’ peg against the US dollar.

Although inflation is relatively muted in the wider Gulf region in comparison to the US and Europe, regulators have little room to maneuver when it comes to monetary policy due to the greenback-pegging policy. They tend to move in lockstep with the US central bank decisions with most regulators in the region following the Fed’s rate hikes this year.