Bahrain's central bank holds rate at 4.5% after Fed decision

what happened

The Central Bank of Bahrain (CBB) kept its overnight deposit rate at 4.5%. The decision came after the US Federal Reserve also left its Interest Rate on Reserve Balances (IORB) unchanged, Reuters reports. US stocks edged higher on Wednesday, with the Dow Jones up 0.19%, the Nasdaq Composite up 0.27% and the S&P 500 up 0.28%.

Fed Chair Kevin Warsh said there are signs that financial conditions have tightened in the weeks since the central bank raised rates in September. The CBB said its move followed a review by its experts aimed at preserving monetary and financial stability in the kingdom, given developments in global financial markets.

Central banks in the UAE and Qatar also held their rates. The CBUAE kept its base rate on the overnight deposit facility at 3.9% and its short-term borrowing rate at 50 basis points above that base rate. The Qatar Central Bank left its deposit rate at 4.10%, its lending rate at 4.60% and its repo rate at 4.35%.

why it matters

Gulf currency pegs and policy rates track the Fed closely, so decisions in Washington pass quickly into the region. For investors, the message is that regional monetary conditions are not changing for now, and the main reference point remains the US central bank.

market impact

Gulf currencies and regional equities: rates follow the Fed, so the hold keeps conditions steady

tags

instruments