The central banks of the UAE, Saudi Arabia, Bahrain, Kuwait and Qatar raised their benchmark borrowing rates after the US Federal Reserve raised its key interest rate for the fifth time this year to slash surging inflation and restore price stability.
The Fed on Wednesday increased the policy rate by 75 basis points (bps), its third consecutive three-quarters of a percentage point increase.
The latest move by the US central bank came after consumer prices rose by 8.3 per cent in August, exceeding economists' expectations of 8.1 per cent and above the Fed’s 2 per cent target.
After being criticised for acting too slowly to curb rising prices and being behind the inflation curve, the Fed has shifted gears and is doubling down on higher interest rates to bring consumer prices down.
The Fed signalled further rate raises were possible, stating that it “anticipates that ongoing increases in the target range will be appropriate”.
Most central banks in the GCC follow the Fed's policy rate moves because their currencies are pegged to the US dollar.
In line with its “objective of maintaining monetary and financial stability, and in light of recent global developments”, the Saudi Central Bank, better known as Sama, raised its repurchase agreement (repo) rate by three quarters of a percentage point to 3.75 per cent and its reverse repo rate by a similar margin to 3.25 per cent.
Annual inflation in the kingdom, the Arab world's largest economy, edged higher to 3 per cent in August from the same month a year earlier, driven by rising food and beverage prices, as well as increasing transport costs. Inflation edged up from an annual 2.7 per cent increase recorded in July and June's 2.3 per cent, according to Saudi Arabia’s General Authority for Statistics.
The kingdom’s economy is set to grow at the quickest pace in a decade and could be one of the world’s fastest-growing economies this year, according to the International Monetary Fund.
Saudi Arabia’s economy grew 12.2 per cent in the second quarter, exceeding initial estimates and registering the fastest expansion since the third quarter of 2011.
Globally, the IMF forecasts inflation to reach 5.7 per cent in advanced economies and 8.7 per cent in emerging market and developing economies this year. The fund expects inflation in Saudi Arabia to remain contained at 2.8 per cent in 2022 as its central bank tightens monetary policy in line with the US Federal Reserve.
The Central Bank of the UAE raised its benchmark base rate for its overnight deposit facility (ODF) by three quarters of a percentage point to 3.15 per cent. It maintained the rate applicable to borrowing short-term liquidity from the regulator through all standing credit facilities at 50 bps above the base rate, the CBUAE said on Wednesday.
The base rate, which is anchored to the Fed's interest on reserve balances (IORB), signals the general stance of the CBUAE's monetary policy and provides an effective interest rate floor for overnight money market rates.
Inflation in the UAE is relatively low when compared with rates in other parts of the world. The consumer price index increased by 3.4 per cent during the first quarter of 2022, compared with 0.6 per cent and 2.3 per cent in the third and fourth quarters of 2021, respectively.
Inflation in the Emirates is expected to reach 5.6 per cent in 2022 and 4.2 per cent in 2023, according to the latest data from the CBUAE.
The UAE economy is set to expand by an annual 5.4 per cent this year and post its strongest annual expansion since 2011 after it grew by 8.4 per cent in the first three months of this year on higher oil prices and measures to mitigate the impact of the Covid-19 pandemic, according the CBUAE.
The economy expanded by 3.8 per cent in 2021 and is expected to grow by 4.2 per cent in 2023.
The Central Bank of Kuwait (CBK) also increased its discount rate by 0.25 bps to 3.00 per cent. The CBK said it also changed the rates of monetary policy instruments by varying percentages for the entire interest rate yield curve, including repurchases, CBK bonds and tawarruq, term deposits, direct intervention instruments, as well as public debt instruments.
The Central Bank of Bahrain (CBB) increased its key rate on one-week deposits by 75 basis points to 4.00 per cent “to ensure the smooth functioning of the money markets” in the kingdom.
The interest rate on overnight deposits was also raised by three quarters of a percentage point to 3.75 per cent, and the interest rate on four-week deposits by 75 bps to 4.75 per cent, the CBB said.
The Bahraini regulator also raised the interest rate applicable to its lending facilities to retail banks in the kingdom by three quarters of a percentage point to 5.25 per cent.
The Central Bank of Qatar raised its repo rate by 75 bps to 4.00 per cent. It raised its deposit rate by three quarters of a percentage point to 3.75 per cent and the lending rate by an equal amount to 4.50 per cent.
In March, the Fed raised rates by a quarter percentage point for the first time since December 2018, after keeping them near zero to soften the impact of Covid-19 on the economy.
Surging oil and gas prices, exacerbated by Russia’s war in Ukraine, have fed into rising inflation.
Brent, the benchmark for more than two thirds of the world's crude, soared to a notch under $140 a barrel in March after the start of the Russia-Ukraine war.
While oil prices have given up their gains and are down about 20 per cent since early June, they are still trading near $90 a barrel.
The impact of higher energy prices and shrinking consumer spending power on economic growth has also hit US stocks, plunging markets into bear territory.
The Russia-Ukraine conflict, coupled with stop-and-go restrictions from the Covid-19 pandemic, along with supply chains and global trade which are still recovering, prompted the World Bank to slash its 2022 growth forecast for the global economy for the second time this year to 2.9 per cent, from 3.2 per cent.
The IMF has cut its growth forecast for the global economy to 3.6 per cent for 2022 and 2023, while the Institute of International Finance lowered its estimate to 2.3 per cent.
After the Fed stepped in with a series of monetary measures after the onset of the pandemic, it is now engaged in a delicate balancing act as excessive monetary tightening risks tipping the world's largest economy into a recession, which could reverberate globally.
“As central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging market and developing economies that would do them lasting harm,” the World Bank warned in a report last week.
Investors expect central banks to raise global monetary policy rates to about 4 per cent through 2023 — an increase of more than 2 percentage points over their 2021 average, the lender said.
If supply disruptions and labour market pressures do not ease, interest rate increases could leave the global core inflation rate (excluding energy) at about 5 per cent in 2023 — nearly double the five-year average before the pandemic, according to the World Bank.
To cut global inflation to a rate consistent with their targets, central banks may need to raise interest rates by an additional 2 percentage points, it said.
“If this were accompanied by financial market stress, global GDP growth would slow to 0.5 per cent in 2023 — a 0.4 per cent contraction in per capita terms that would meet the technical definition of a global recession,” it said.
World Bank president David Malpass said the global economy was slowing sharply, with more countries expected to slide into recession.
“To achieve low inflation rates, currency stability and faster growth, policymakers could shift their focus from reducing consumption to boosting production,” he said
“Policies should seek to generate additional investment and improve productivity and capital allocation, which are critical for growth and poverty reduction.”
RESULTS
Dubai Kahayla Classic – Group 1 (PA) $750,000 (Dirt) 2,000m
Winner: Deryan, Ioritz Mendizabal (jockey), Didier Guillemin (trainer).
Godolphin Mile – Group 2 (TB) $750,000 (D) 1,600m
Winner: Secret Ambition, Tadhg O’Shea, Satish Seemar
Dubai Gold Cup – Group 2 (TB) $750,000 (Turf) 3,200m
Winner: Subjectivist, Joe Fanning, Mark Johnston
Al Quoz Sprint – Group 1 (TB) $1million (T) 1,200m
Winner: Extravagant Kid, Ryan Moore, Brendan Walsh
UAE Derby – Group 2 (TB) $750,000 (D) 1,900m
Winner: Rebel’s Romance, William Buick, Charlie Appleby
Dubai Golden Shaheen – Group 1 (TB) $1.5million (D) 1,200m
Winner: Zenden, Antonio Fresu, Carlos David
Dubai Turf – Group 1 (TB) $4million (T) 1,800m
Winner: Lord North, Frankie Dettori, John Gosden
Dubai Sheema Classic – Group 1 (TB) $5million (T) 2,410m
Winner: Mishriff, John Egan, John Gosden
Six large-scale objects on show
- Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
- The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
- A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
- Frank Lloyd Wright’s 1930s Kaufmann Office
- A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century
- Torrijos Palace dome
Test series fixtures
(All matches start at 2pm UAE)
1st Test Lord's, London from Thursday to Monday
2nd Test Nottingham from July 14-18
3rd Test The Oval, London from July 27-31
4th Test Manchester from August 4-8
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Profile of Udrive
Date started: March 2016
Founder: Hasib Khan
Based: Dubai
Employees: 40
Amount raised (to date): $3.25m – $750,000 seed funding in 2017 and a Seed round of $2.5m last year. Raised $1.3m from Eureeca investors in January 2021 as part of a Series A round with a $5m target.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Company%C2%A0profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3ELeap%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EMarch%202021%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Ziad%20Toqan%20and%20Jamil%20Khammu%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%0D%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3EPre-seed%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%3A%3C%2Fstrong%3E%20Undisclosed%0D%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%20%3C%2Fstrong%3ESeven%3C%2Fp%3E%0A
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
UAE currency: the story behind the money in your pockets
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
UAE currency: the story behind the money in your pockets
Frankenstein in Baghdad
Ahmed Saadawi
Penguin Press
World record transfers
1. Kylian Mbappe - to Real Madrid in 2017/18 - €180 million (Dh770.4m - if a deal goes through)
2. Paul Pogba - to Manchester United in 2016/17 - €105m
3. Gareth Bale - to Real Madrid in 2013/14 - €101m
4. Cristiano Ronaldo - to Real Madrid in 2009/10 - €94m
5. Gonzalo Higuain - to Juventus in 2016/17 - €90m
6. Neymar - to Barcelona in 2013/14 - €88.2m
7. Romelu Lukaku - to Manchester United in 2017/18 - €84.7m
8. Luis Suarez - to Barcelona in 2014/15 - €81.72m
9. Angel di Maria - to Manchester United in 2014/15 - €75m
10. James Rodriguez - to Real Madrid in 2014/15 - €75m
ENGLAND%20SQUAD
%3Cp%3EFor%20Euro%202024%20qualifers%20away%20to%20Malta%20on%20June%2016%20and%20at%20home%20to%20North%20Macedonia%20on%20June%2019%3A%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EGoalkeepers%3C%2Fstrong%3E%20Johnstone%2C%20Pickford%2C%20Ramsdale.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EDefenders%3C%2Fstrong%3E%20Alexander-Arnold%2C%20Dunk%2C%20Guehi%2C%20Maguire%2C%20%20Mings%2C%20Shaw%2C%20Stones%2C%20Trippier%2C%20Walker.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EMidfielders%3C%2Fstrong%3E%20Bellingham%2C%20Eze%2C%20Gallagher%2C%20Henderson%2C%20%20Maddison%2C%20Phillips%2C%20Rice.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EForwards%20%3C%2Fstrong%3EFoden%2C%20Grealish%2C%20Kane%2C%20Rashford%2C%20Saka%2C%20Wilson.%3C%2Fp%3E%0A
Walls
Louis Tomlinson
3 out of 5 stars
(Syco Music/Arista Records)
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
MATCH INFO
Uefa Champions League quarter-final (first-leg score):
Juventus (1) v Ajax (1), Tuesday, 11pm UAE
Match will be shown on BeIN Sports
The Case For Trump
By Victor Davis Hanson
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Haltia.ai%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202023%0D%3Cbr%3E%3Cstrong%3ECo-founders%3A%3C%2Fstrong%3E%20Arto%20Bendiken%20and%20Talal%20Thabet%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20AI%0D%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%2041%0D%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20About%20%241.7%20million%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Self%2C%20family%20and%20friends%26nbsp%3B%3C%2Fp%3E%0A
Huroob Ezterari
Director: Ahmed Moussa
Starring: Ahmed El Sakka, Amir Karara, Ghada Adel and Moustafa Mohammed
Three stars
AI traffic lights to ease congestion at seven points to Sheikh Zayed bin Sultan Street
The seven points are:
Shakhbout bin Sultan Street
Dhafeer Street
Hadbat Al Ghubainah Street (outbound)
Salama bint Butti Street
Al Dhafra Street
Rabdan Street
Umm Yifina Street exit (inbound)
Jebel Ali results
2pm: Handicap (PA) Dh 50,000 (Dirt) 1,400m
Winner: AF Al Moreeb, Antonio Fresu (jockey), Ernst Oertel (trainer)
2.30pm: Maiden (TB) Dh 60,000 (D) 1,400m
Winner: Shamikh, Ryan Curatolo, Nicholas Bachalard
3pm: Handicap (TB) Dh 64,000 (D) 1,600m
Winner: One Vision, Connor Beasley, Ali Rashid Al Raihe
3.30pm: Conditions (TB) Dh 100,000 (D) 1,600m
Winner: Gabr, Sam Hitchcott, Doug Watson
4pm: Handicap (TB) Dh 96,000 (D) 1,800m
Winner: Just A Penny, Sam Hitchcock, Doug Watson
4.30pm: Maiden (TB) Dh 60,000 (D) 1,600m
Winner: Torno Subito, Sam Hitchcock, Doug Watson
5pm: Handicap (TB) Dh 76,000 (D) 1,950m
Winner: Untold Secret, Jose Santiago, Salem bin Ghadayer
Gulf Men's League final
Dubai Hurricanes 24-12 Abu Dhabi Harlequins
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
