Five Gulf Central Banks Match the Fed’s Rise as Warsh Calls Inflation Too High for Too Long
Five Gulf central banks moved within hours of the Federal Reserve on Wednesday. The Saudi Central Bank raised its repo rate by 25 basis points to 4.50 percent and its reverse repo rate by 25 basis points to 4 percent, the Central Bank of the UAE raised its Base Rate by 25 basis points to 3.90 percent, Qatar Central Bank raised all three of its policy rates by 25 basis points, and Bahrain and Oman followed with quarter point rises of their own, each answering the Fed’s quarter point rise to a range of 3.75 to 4 percent. The Saudi notice is timed 9:15 in the evening Saudi time on the central bank’s own page, 18:15 GMT, 15 minutes after the Fed’s statement.
Five banks, one move, and the mechanics on display
The Saudi release is two sentences, and the second is the whole doctrine: the decision “is in line with SAMA’s mandate of preserving monetary stability”. The riyal’s peg to the dollar means the kingdom imports the Fed’s policy rate or invites pressure on the currency, and the repo now sits at 4.50 percent with the reverse repo, the floor banks earn on deposits at the central bank, at 4 percent.
Abu Dhabi wrote the mechanics out. The Central Bank of the UAE said its Base Rate, which applies to the overnight deposit facility, rises from 3.65 percent to 3.90 percent effective Thursday 17 September, and said plainly that the decision “was taken following the US Federal Reserve’s announcement today to raise the Interest Rate on Reserve Balances (IORB) by 25 basis points”. The Base Rate, “anchored to the US Federal Reserve’s IORB”, provides “an effective floor for overnight money market interest rates in the UAE”, the bank said, and the rate for borrowing short term liquidity stays 50 basis points above it. The new 3.90 percent matches the Fed’s new reserve rate exactly, effective the same day.
Qatar Central Bank framed its move as its own judgment, saying it “has conducted an assessment of the current monetary policy of the State of Qatar” and decided to raise its deposit rate to 4.10 percent, its lending rate to 4.60 percent and its repo rate to 4.35 percent, all by 25 basis points and all from Thursday 17 September.
Bahrain and Oman completed the set. The Central Bank of Bahrain raised its overnight deposit interest rate by 25 basis points from 4.25 percent to 4.50 percent effective 17 September, a decision that “comes as part of the measures taken by CBB in maintaining monetary and financial stability in the Kingdom of Bahrain in light of global financial market developments”, per the Bahrain News Agency, whose item is timed 9:37 in the evening Bahrain time, 18:37 GMT. And the Central Bank of Oman raised the repo rate on its transactions with domestic banks by 25 basis points, from 4.25 percent to 4.50 percent, effective 17 September, calling the decision “consistent with the fixed exchange rate regime of the Omani Rial” and saying the measure is expected “to help contain inflationary pressures and maintain price stability, while mitigating undesirable cross-border capital flows”.
The moves
| Central bank | Rate | New level, % | Change, basis points |
|---|---|---|---|
| Saudi Central Bank | Repo | 4.50 | +25 |
| Saudi Central Bank | Reverse repo | 4.00 | +25 |
| Central Bank of the UAE | Base Rate | 3.90 | +25 |
| Qatar Central Bank | Deposit | 4.10 | +25 |
| Qatar Central Bank | Lending | 4.60 | +25 |
| Qatar Central Bank | Repo | 4.35 | +25 |
| Central Bank of Bahrain | Overnight deposit | 4.50 | +25 |
| Central Bank of Oman | Repo | 4.50 | +25 |
From each central bank’s own announcement of 16 September 2026. The UAE, Qatar, Bahrain and Oman moves are effective Thursday 17 September per their releases; the Saudi release states no effective date. The Bahrain decision is as carried by the Bahrain News Agency.
What the Gulf just imported: no path and no comfort from Warsh
The Gulf is importing more than a quarter point, on our reading of the chairman’s press conference. Kevin Warsh’s message was hawkish on the level and silent on the path: “The plain fact is that inflation is too high, and has been for too long”, he said in his opening remarks, adding that “this summer’s inflation readings do not tell me that underlying trends have meaningfully improved”, and turning the path question away outright: “I’m not in the forward guidance business”. The projections released with the statement speak instead: 12 of the Committee’s participants indicated another increase this year, 4 anticipate two more and 2 see none, with the chairman again withholding his own forecast, per the network’s account of the dots, and the median finishes the year at 4.1 percent.
Kuwait sets its own terms, an hour before the Fed spoke
Kuwait’s difference is by construction: since May 2007 the dinar has been pegged to an undisclosed weighted basket of the currencies of Kuwait’s major trade and financial partners, per the bank’s own exchange rate policy page, which leaves it discretion over its rates that a pure dollar peg does not allow. The Central Bank of Kuwait used it on Wednesday in a press statement whose release id in the bank’s own web address carries the 20:00 Kuwait time stamp, 17:00 GMT, an hour before the Fed’s statement: its assessment “reflects the soundness and strength of the monetary and financial stability in the State of Kuwait”, it said, “prevailing monetary conditions are considered consistent with domestic economic conditions”, and the current discount rate stands at 3.5 percent. The statement is not styled as a rate decision, and on our reading it is the bank saying it sees no case to move: it backed the point with data, broad money up 1.9 percent in July year on year, residents’ deposits up 9.8 percent and credit to residents up 4.8 percent, and closed on “a gradual and balanced approach”.
Why it matters: the pegs turned Wednesday’s Washington decision into Gulf monetary policy within the evening, on our reading, and the direction is new: this is the Fed’s first rise since 2023, per the network’s coverage of the decision, so the pegs are importing tightening for the first time in this cycle, with oil above 100 dollars a barrel. The Fed’s own projections carry one more rise this year on the median, so the Gulf’s cost of money has a signposted next step.
Outlook: Kuwait’s statement leaves its discount rate standing at 3.5 percent, and every dollar pegged Gulf central bank has now matched the Fed; our Middle East wrap on Thursday carries the official reference rates on their own dates as always. The Fed’s next scheduled meetings are 27 to 28 October and 8 to 9 December, and the pegged Gulf will answer whatever they produce.
Sources: Saudi Central Bank, Central Bank of the UAE, Qatar Central Bank, Central Bank of Kuwait, Central Bank of Oman, Bahrain News Agency, Federal Reserve, CNBC, The Edge.
