Money
The Fed Raises for the First Time Since 2023, and Every Gulf Central Bank but Kuwait's Follows Within a Day
A unanimous 25-basis-point rise to 3.75–4.00 percent, a hawkish dot plot and a chairman who says "inflation is too high and has been too long." Qatar's deposit rate is 4.10 percent from this morning; the Gulf Times says markets price more.
The Federal Open Market Committee raised its target range on Wednesday to 3.75–4.00 percent by a vote of 12–0, the first increase since 2023. The statement said the policy action "will support a timelier return to the Committee's 2 percent goal"; the projections put the median funds rate at 4.1 percent for the end of both 2026 and 2027, with sixteen of eighteen participants seeing at least one more rise this year and inflation not back to 2 percent until 2029. Chair Warsh, at the press conference, said he would be "hard-pressed" to call financial conditions restrictive and that "prices of many of these key inputs have risen" — commodities included. Personal consumption inflation was 3.6 percent in August, 3.2 percent core.
The Gulf followed the same evening. The Qatar Central Bank raised its deposit rate to 4.10 percent, lending to 4.60 and repo to 4.35, effective Thursday, "pursuant to an assessment of the current monetary policy." The UAE's base rate went to 3.90 percent, Saudi Arabia's repo to 4.50 and reverse repo to 4.00, Bahrain and Oman to 4.50; Kuwait, on a basket peg, held at 3.50. The Gulf Times' analysis noted that markets price around three further rises by the end of 2027 on oil-shock fears.
Doha's market had already moved. The QE Index fell 1.4 percent on Wednesday with every constituent down — QIB off 2.4 percent — before a 0.2 percent recovery on Thursday to 9,659, leaving it 1.7 percent lower on the week; Abu Dhabi, Dubai and Riyadh ended Thursday higher or flat. Brent, which topped $109 on Monday when the Salalah talks were postponed, fell 4 percent on Thursday to about $104 as Saudi Arabia offered extra crude to Asian refiners by ship-to-ship transfer off Sohar; the East-West pipeline remains shut, with Aramco promising partial capacity "within days" and officials citing three to five weeks of repairs.
Next week the calendar turns to demand: H&M's nine-month report on Thursday, U.S. core inflation on the 30th, and, in Doha, the Jewellery and Watches Exhibition from the 28th — the first hard-luxury test of a season that now begins with dearer money.
Sources: Federal Reserve statement, 16 Sep · FOMC press conference transcript · The Peninsula (QCB), 16 Sep · Arab News, 17 Sep · Gulf News, 16 Sep · Gulf Times, 17 Sep · Reuters via Business Recorder, 17 Sep · Fortune, 17 Sep · Al Jazeera, 17 Sep · Federal Reserve statement, 16 Sep · FOMC press conference transcript · The Peninsula, 16 Sep (QCB) · Arab News, 17 Sep · Gulf News, 16 Sep · Gulf Times, 17 Sep · Reuters via Business Recorder, 17 Sep · Fortune, 17 Sep · Al Jazeera, 17 Sep