Coverage: Q3 2026 · Information to 13 October 2026
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TGB Quarterly Regional Banking Monitor · 13 October 2026
The central banks of the UAE, Saudi Arabia and Bahrain raised rates by 25 bp after the Fed's 16 September increase, Egypt and Morocco held, and Brent averaged $114 a barrel in September.
The desk view
The Federal Open Market Committee raised its target range by 1/4 percentage point on 16 September 2026. The central banks of the UAE, Saudi Arabia and Bahrain each raised rates by 25 bp within a day of that decision. Egypt held its three policy rates on 24 September and Morocco held at 2.25% on 22 September. Brent averaged $114 a barrel in September, $23 a barrel above August, and attacks on Saudi Arabia's East-West pipeline temporarily halted flows on a Hormuz bypass. Half-year results from three large Gulf banks showed net profit growth of 14.2% at Al Rajhi Bank, 3% at Emirates NBD and 1% at First Abu Dhabi Bank. This suggests that profit growth at large Gulf banks was already uneven before the September rate rises. Oil supply is the second driver of the quarter's story.
Policy rates follow the Fed higher
The US decision
On 16 September 2026 the FOMC raised the federal funds target range by 1/4 percentage point to 3-3/4 to 4%. The statement was approved by a 12 to 0 vote. It said inflation remains elevated and that the action would support a timelier return to the 2% goal. The Federal Reserve Board raised the interest rate on reserve balances to 3.90%, effective 17 September 2026.
On 29 July the FOMC kept the target range at 3-1/2 to 3-3/4% by a 9 to 3 vote. The three members who voted against preferred a 1/4 percentage point increase at that meeting. This suggests that the September decision was the outcome of a debate already visible in July, and not a sudden change of course.
Gulf central banks move in step
The Central Bank of the UAE raised the Base Rate on its Overnight Deposit Facility by 25 basis points, from 3.65% to 3.9%, effective Thursday 17 September. It described the Base Rate as anchored to the Federal Reserve's interest rate on reserve balances. The new Base Rate of 3.9% is the same figure as the Fed's 3.90% rate on reserves. The CBUAE kept the rate on borrowing from its standing credit facilities at 50 basis points above the Base Rate. That puts the cost of such borrowing at 4.4%.
The Saudi Central Bank raised its repo rate by 25 basis points to 4.50% and its reverse repo rate by 25 basis points to 4.00%, in a decision published on a page dated 16 September 2026. The Central Bank of Bahrain raised its overnight deposit interest rate by 25 basis points, from 4.25% to 4.50%, effective 17 September 2026.
The three decisions were of equal size, were announced within a day of the FOMC and, in the UAE and Bahrain, took effect on the day after it. This suggests that Gulf policy-setting followed US rates closely in the September decision round, and the UAE's stated anchoring of its Base Rate to the Fed's rate on reserve balances is the clearest documented link.
Egypt and Morocco did not follow
The Monetary Policy Committee of the Central Bank of Egypt kept its overnight deposit, overnight lending and main operation rates at 19.00, 20.00 and 19.50% on 24 September. It had held the same three rates on 20 August. Bank Al-Maghrib kept its key rate unchanged at 2.25% on 22 September and said it would take decisions meeting by meeting. The reasons are set out in the country sections below, but the pattern is clear: the Fed's September increase passed through to the Gulf, and not to the two North African markets covered here.