Three GCC Central Banks Hold Interest Rates After US Federal Reserve Decision
Three Gulf central banks — in Qatar, Bahrain and the UAE — announced decisions to keep their key interest rates unchanged following the US Federal Reserve’s latest decision to hold its benchmark rate steady.
The moves reflect the close link between monetary policy in the Gulf and US interest-rate decisions, particularly as most GCC currencies are pegged to the US dollar or closely influenced by dollar movements.
The Federal Reserve kept the target range for the federal funds rate unchanged at 3.50% to 3.75%, its fourth consecutive hold, while noting that inflation remains above its long-term 2% objective. In response, Gulf monetary authorities maintained a cautious stance aimed at preserving financial and monetary stability while balancing inflationary pressures with economic growth.
Qatar Central Bank
Qatar Central Bank decided to keep its current interest rates unchanged across its monetary policy instruments. The bank maintained the Deposit Rate (QCBDR) at 3.85%, the Lending Rate (QCBLR) at 4.35%, and the Repo Rate (QCBRR) at 4.10%.
The central bank said the decision followed a comprehensive assessment of monetary policy conditions in Qatar. The move is consistent with Qatar’s policy framework, which focuses on maintaining the stability of the Qatari riyal against the US dollar while monitoring global interest-rate developments.
Central Bank of Bahrain
The Central Bank of Bahrain kept its overnight deposit rate unchanged at 4.25%. The regulator said the decision came as part of its ongoing monitoring of international financial market developments and its efforts to maintain monetary and financial stability in the kingdom.
Central Bank of the UAE
The Central Bank of the UAE kept its base rate unchanged at 3.65%, following the Federal Reserve’s decision to maintain US interest rates.
The base rate applies to the Overnight Deposit Facility and serves as a key signal for the UAE’s monetary policy stance. The central bank also kept the rate for short-term borrowing through its standing credit facilities at 50 basis points above the base rate. The decision reflects the UAE dirham’s peg to the US dollar.
Other GCC Policy Rates Remain in Place
Saudi Arabia, Kuwait and Oman did not issue separate rate announcements tied to this Federal Reserve meeting. Their policy rates remain at the levels set previously, in line with their dollar-linked frameworks.
In Saudi Arabia, the latest published levels from the Saudi Central Bank show the repo rate at 4.25% and the reverse repo rate at 3.75%, in place since the December 2025 reduction.
In Kuwait, the Central Bank of Kuwait’s latest indicators show the discount rate at 3.50%, with the overnight repo rate at 3.125%, the one-week repo rate at 3.375%, and the one-month repo rate at 3.625%. Kuwait’s monetary policy typically moves more gradually than some other GCC peers, as the Kuwaiti dinar is linked to a basket of currencies rather than being pegged only to the US dollar.
In Oman, the central bank’s repo rate is calculated through a mechanism linked to the upper bound of the US federal funds target range plus a margin of 50 basis points. Based on the Federal Reserve’s latest decision, Oman’s repo rate remains around 4.25%.
Gulf Monetary Policy Remains Cautious
The latest decisions show that Gulf central banks remain cautious as global interest rates stay relatively elevated. Holding rates steady gives banks, companies and households greater clarity over near-term borrowing costs. Financing costs remain higher than during the low-rate period that followed the pandemic, which may continue to affect credit demand, investment decisions and real estate activity across the region.
For GCC economies, the priority remains maintaining currency stability, anchoring inflation expectations and protecting financial-sector resilience, while still supporting economic growth amid global market volatility.
Key GCC Interest Rates
| Country | Key rate(s) | Status |
|---|---|---|
| Qatar | Deposit 3.85%; Lending 4.35%; Repo 4.10% | Unchanged (announced) |
| Bahrain | Overnight deposit rate 4.25% | Unchanged (announced) |
| UAE | Base rate 3.65% | Unchanged (announced) |
| Saudi Arabia | Repo 4.25%; Reverse repo 3.75% | Stable at latest published level |
| Kuwait | Discount rate 3.50% | Stable at latest published level |
| Oman | Repo rate around 4.25% | Stable under Fed-linked pricing mechanism |
Sources: US Federal Reserve; Qatar Central Bank; Central Bank of Bahrain; Central Bank of the UAE; Saudi Central Bank; Central Bank of Kuwait; Central Bank of Oman.
