The Central Bank of Bahrain’s decision to raise its key policy interest rate on the one-week deposit facility from 5.25 per cent to 5.50pc, the overnight deposit rate from 5pc to 5.25pc, the four-week deposit rate from 6pc to 6.25pc and the lending rates from 6.50pc to 6.75pc is in line with rising global interest rates, especially since the dinar is pegged to the dollar, said Bahrain Bourse chairman Abdulkarim Bucheeri.

Deposits were more affected by the interest rate than loans because deposits are short-term, ranging from six months to about a year, but loans are long-term, ranging from 5 to 6 years, he told our sister paper Akhbar Al Khaleej.

However, most Bahraini banks, despite the increase in global interest rates, reaching eight times, didn’t raise interest rates on individual loans, and were also committed to fixing the interest rate in the agreement, although commercial banks, when financing individuals and companies, include conditions stipulating that they have the right to increase interest rates when they are increased globally, but only one bank raised interest rates for individuals, he said.

However, corporate loans and capital loans are affected by the interest rate hikes. A year ago, the interest rate was 1pc and rose to 6pc, which constitutes a burden on small and medium-sized companies, so companies must adapt to the situation, reduce expenses and stay away from luxuries, he noted.

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