UAE, Saudi Arabia, Qatar, Kuwait and Bahrain cut key interest rates by 25bps following US Fed move

GCC central banks moved in alignment on Wednesday, announcing 25-basis-point reductions across key policy rates following the US Federal Reserve’s decision to cut the Interest Rate on Reserve Balances (IORB).

The coordinated easing reflects the region’s commitment to maintaining monetary stability and supporting local financial conditions amid shifting global economic signals.

The Central Bank of the UAE (CBUAE) reduced the Base Rate applicable to the Overnight Deposit Facility (ODF) from 3.9 per cent to 3.65 per cent, effective December 11.

The Base Rate, which is anchored to the US Federal Reserve’s IORB, serves as a key indicator of the UAE’s monetary policy stance and provides an effective floor for overnight money market rates.

GCC central banks cut interest rates

The CBUAE also maintained the interest rate on borrowing short-term liquidity at 50 basis points above the Base Rate across all standing credit facilities.

In Saudi Arabia, the Saudi Central Bank (SAMA) reduced its Repurchase Agreement (Repo) rate by 25 basis points to 4.25 per cent and lowered the Reverse Repo rate to 3.75 per cent.

SAMA said the move reflects global developments and aligns with its objective of maintaining monetary stability.

Qatar Central Bank (QCB) also implemented a 25-basis-point reduction across key instruments. QCB lowered the deposit rate to 3.85 per cent, the lending rate to 4.35 per cent and the repo rate to 4.10 per cent, following its assessment of domestic monetary policy needs.

In Kuwait, the Central Bank of Kuwait cut its discount rate by 25 basis points to 3.50 per cent, effective Thursday.

Gulf rate cuts

The Bank said the decision aims to support local financial stability while maintaining a gradual and flexible policy approach.

The Central Bank of Bahrain (CBB) similarly reduced its overnight deposit interest rate by 25 basis points, lowering it from 4.50 per cent to 4.25 per cent effective 11 December. The CBB said the move forms part of its measures to maintain monetary and financial stability amid ongoing developments in international financial markets.

The coordinated rate cuts across the GCC underscore the region’s alignment with global monetary trends and highlight the central banks’ efforts to support liquidity conditions, preserve stability and ensure economic resilience.