QCB maintains status quo on interest rates; mirrors US Fed's stance

The Qatar Central Bank (QCB) has maintained status quo on its interest rates, following the US Federal Reserve's policy to pause rate hike in its latest meeting."QCB has assessed the current monetary requirements of Qatar and has decided to continue with the current interest rates" for deposit, lending and repo, the central bank said in its social media handle.The central bank said it will continue to assess the appropriate monetary policy, factoring in all aspects, which may affect financial stability and will review its monetary policy as and when appropriate to address changes in economic requirements.The QCB in July increased the repo, deposit and lending rates by 25 basis points, after the Fed raised the reference rates (by 25 basis points) to their highest level in more than two decades.Qatar has so far seen a cumulative 5% or 500 basis points hike in interest rates since January 2022, even as the QCB outlined four major priority sectors that would not bear the brunt of rate hike on their outstanding loans.Since January 2022, repo rate has risen from 1% to 1.25% in March, 1.75% in May, 2.5% in June, 3.25% in July, 4% in September, 4.75% in November, 5.25% in December, 5.5% in March, 5.75% in May 2023 and the 6% in July. In 2022, the average repo rate was 2.77%.The QCB lending rate has cumulatively increased by 3.75% or 375bps since the beginning of 2022, jumping from 2.5% in January to 2.75% in May, 3.25% in June, 3.75% in July, 4.5% in September, 5% in November, 5.5% in December, 5.75% in March, 6% in May and 6.25% in July.On credit facilities, the interest rate (weighted average) on loans less than one year was rose to 6.51% in July 2023 against 4.67% in July 2022; on loans from one to three years to 7.17% (3.82%); and on loans of three years and above to 6.81% (4.9%).However, the QCB had in July this year said there are various sectors that benefit from the non-increase in interest/return rates on the outstanding credit facilities in national banks.The eligible sectors include private housing and consumption loans to Qatari citizens; service sector; industrial manufacturing; and trading sector. Within the servicers sector that ought to benefit include tourism, restaurants, hotels, entertainment, mechanical workshops, exhibitions and machinery repairs.The QCB deposit rate has cumulatively jumped by 4.75% or 475bps, increasing from 1% in January 2022 to 1.5% in May, 2.25% in June, 3% in July, 3.75% in September, 4.5% in November, 5% in December 2022, 5.25% in March 2023, 5.5% in May 2023 and 5.75% this July.The rates on deposits of one-month stood at 4.59% in July 2023 against 2.08% year-ago period; three-month deposits 5.33% (2.3%); six-month deposits 5.07% (2.34%); one-year 4.74% (2.06%) and more than one year 5.16% (2.09%).The interest rates on demand deposits had a chequered path. From 0.29% in January 2023, it rose to 0.88% in February but only to fall to 0.51% in March. Again in April it rose to 0.55% but fell to 0.2% in May. In June this year, it soared to 0.84% but only to decline to 0.41% in July 2023.In the case of savings deposits, the rates have been on the increasing mode since March 2023. It was 0.38% in January, which fell to 0.18% in the subsequent month. After which it soared to 0.32% in March, 0.33% in April, 0.39% in May, 0.47% in June and 0.49% in July 2023.The weighted average overnight interbank interest rate (on riyal) noticeably shot up from January 2022 when it was 0.28%. In July 2022, it spurted to 1.68%, 2.62% in August, 2.61% in September, 3.7% in October, 4.31% in November, 4.68% in December, 4.97% in January 2023, 5.02% in February 2023, 5.12% in March 2023, 5.3% in April 2023, 5.51% in May 2023, 5.54% in June 2023 and 5.63% in 2023.