GCC Central Banks Keep Interest Rates Unchanged, Following US Fed

BY THE ARAB TODAY Jul 31, 2025

Image Credit: Forbes Middle East

Table of Contents

GCC Central Banks Keep Interest Rates Unchanged, Following US Fed

Central banks in the Gulf Cooperation Council (GCC) have decided to keep their interest rates steady. This move comes after the US Federal Reserve (the Fed) also kept its interest rates unchanged due to signs of a slowing economy and continued inflation.

Interest Rates Stay the Same in GCC Countries

The Central Bank of the UAE kept its overnight deposit rate at 4.4%.
Qatar’s Central Bank kept its deposit rate at 4.6%, lending rate at 5.1%, and repo rate at 4.85%.
Bahrain’s Central Bank held its overnight deposit rate at 5%.

Most GCC countries follow the Fed’s decisions to support their currencies, which are linked to the US dollar, and to keep their economies stable. Kuwait is an exception and does not always follow the Fed.

Inflation Trends in the Region

In the UAE, inflation was 1.4% in early 2025, mostly due to lower energy costs. The central bank slightly reduced its inflation forecast for the year to 1.9%.
In Saudi Arabia, inflation was 2.3% in April. Lower transport and communication prices helped balance out rising housing rents.
Oman saw a 0.8% rise in inflation from January to May 2025. This was mainly because of stable fuel and housing prices, even as food prices dropped.

On average, inflation across GCC countries dropped to 1.7% in 2024, compared to 2.2% the year before.

US Fed Keeps Rates Steady

The US Federal Reserve left its main interest rate between 4.25% and 4.5%—the fifth time in a row it hasn’t changed rates. Before the decision, former President Donald Trump criticized the Fed’s chair, saying any future rate cuts would be “too late.”