Abu Dhabi – Mubasher: Three GCC countries have increased interest rates after the US Federal Reserve raised interest rate by 0.25% on Wednesday.
The Saudi Arabian Monetary Authority (SAMA), the Central Bank of the UAE, and the Central Bank of Bahrain (CBB) raised interest rates by 0.25%.
The Central Bank of Kuwait kept interest rate unchanged, while the Central Bank of Oman and Qatar Central Bank (QCB) did not announce any decision regarding interest rate.
On Wednesday, the Fed raised interest rates by 0.25% targeting a range of 1.25% to 1.50%.
It was the third time that the Fed implemented the interest hike in 2017.
GCC's interest rate hike is 'ill-timed'
The GCC's increase of interest rate in the current period may be 'ill-timed' as the economy’s cycle in the US is different from the GCC, capital market analyst Wadah Al Taha said.
The main reason that made Kuwait remained interest unchanged is that Kuwait links its currency with some currencies not only with the USD, Al Taha added.
Real estate most impacted by rate hike
The ongoing gradual hike in the US interest rate will in return withdraw investors’ liquidity from stocks to bank deposits, said Mohamed Zidan, Senior Market Analyst at Thank Markets.
The GCC’s real estate market will be the most impacted sector by interest hike, Zidan added.
The rate hikes will weigh on funding of real estate purchases that leads to a recession in the sector, the Senior Market Analyst at Thank Markets concluded.
