**Saudi Arabia’s central bank raises interest rates by 25 basis points**
* The Saudi Arabian Monetary Authority (SAMA) raised its repo rate by 25 basis points to 3.25%, effective Monday, May 15, 2023.
* The reverse repo rate was also increased by 25 basis points to 2.25%.
* The move brings Saudi Arabia’s interest rates in line with those of the United States Federal Reserve, which has raised rates by 25 basis points three times this year.
**Impact on the Saudi economy**
* The interest rate hike is likely to have a modest impact on the Saudi economy.
* Higher interest rates make it more expensive for businesses to borrow money and invest, which could slow economic growth slightly.
* However, the Saudi economy is still expected to grow by around 3% this year, supported by high oil prices and government spending.
* **Impact on the Saudi riyal**
* The interest rate hike is likely to support the Saudi riyal, which is pegged to the US dollar.
* Higher interest rates make the riyal more attractive to investors, who will earn a higher return on their investments in Saudi Arabia.
* The riyal has been under pressure in recent months due to the strong US dollar and the global economic slowdown.
**Conclusion**
* The Saudi central bank’s decision to raise interest rates is a sign that it is confident in the Saudi economy.
* The move is likely to have a modest impact on the economy and support the Saudi riyal.
* Saudi Arabia is expected to remain one of the fastest-growing economies in the Middle East in the coming years.
**Additional information**
* The Saudi central bank last raised interest rates in March 2020, when it cut them by 50 basis points to support the economy during the COVID-19 pandemic.
* The US Federal Reserve has raised interest rates by 25 basis points three times this year, in March, May, and June.
* The next meeting of the Saudi central bank’s Monetary Policy Committee is scheduled for June 2023..
