Central banks in the GCC raised interest rates on Wednesday night after the US Federal Open Market Committee (FOMC) delivered its eighth consecutive hike, albeit the smallest at 25 basis points (bps), as part of its continuing struggle to tame inflation.

The Central Bank of UAE raised its base rate on overnight deposits by 25 bps to 4.65%, it said in a statement. 

Most central banks in the GCC usually track the Federal Reserve's policy rate moves as their currencies are pegged to the US dollar. The region has seen inflation averaging 5-6% during 2022, higher than in more than a decade but much lower than in many western countries.

The Saudi Central Bank, known as SAMA, raised its repo and reverse repo rates to 5.25% and 4.75%, respectively.

Bahrain's central bank also lifted its key interest rates by 25 bps. Its one-week deposit facility rate was raised to 5.50% and the overnight deposit rate to 5.25%.

However, the central bank of Qatar decided against raising rates in tandem with the US having assessed its "current monetary requirements". The bank maintained its lending rate at 5.50%; deposit rate at 5% and repo rate at 5.25% respectively, the state news agency QNA said on Twitter.

(Writing by Brinda Darasha; editing by Seban Scaria)