CBB ups key interest rate

Manama : The Central Bank of Bahrain (CBB) said yesterday it has decided to raise its key policy interest rate, effective immediately. 

CBB’s key policy interest rate on the one-week deposit facility will be raised from 0.75 per cent to 1.00pc. 

The CBB has also decided to increase the overnight deposit rate from 0.50pc to 0.75pc, and adjust both the one-month deposit rate from 1.25pc to 1.50pc, and the lending rate from 2.50pc to 2.75pc. 

Separately, Kuwait, following the rate hike announced by the US fed, said it has also decided to raise its benchmark discount rate by 25 basis points to 2.50pc.

Governor Mohammad al-Hashel said in a statement the increase was taken “to ensure the continued competitiveness and attractiveness of the national currency,” after taking into consideration interest rates movements on major currencies.

The hike will be effective from Thursday, the statement said.

The US Federal Reserve on Wednesday raised the benchmark interest rate by a quarter percentage point citing an improving economy.

The Kuwaiti decision was taken despite the sharp decline in the price of oil, which contributes, to over 80 percent of public revenues.

Kuwait is the only member of the six-nation Gulf Cooperation Council (GCC) state not to peg its dinar to the US dollar.

Instead the dinar is linked to a basket of major currencies, the composition of which is kept confidential. But it is believed that the greenback accounts for more than 70 percent of its weight.

Under Central Bank regulations, interest rates on consumer loans cannot exceed three percentage points above the discount rate.