Following an issuance of $275 mn in treasury bills (T-bills) earlier this month, the Qatar Central Bank has recently auctioned new T-bills worth $137 mn. The T-bills, which are being distributed in a short span of one week, will mature on September 28 and have an interest rate of 5.7550 percent.
Keeping interest rates
For its recent issuance, the QCB decided to maintain its current interest rates. This aligns with the US Federal Reserve’s move to pause rate adjustments during its most recent meeting.
The QCB “has assessed the current monetary requirements of the State of Qatar and has decided to continue with the current interest rates,” a statement on the central bank’s social media accounts read. These cover rates for deposit, lending, and repurchase agreements (repo).
T-bills are short-term debt instruments issued by governments. One purpose is to use the borrowed money to boost cash liquidity and subsequently maintain stable economic conditions. While an excessive supply of money can cause inflation, a shortage can lead to a slowdown.
Read: Egypt to auction T-bills valued 600 mn euros
Trends in the past months
In July, the central bank had previously increased repo, deposit, and lending rates by 25 basis points. This coincides with a similar move by the US Federal Reserve. The said entity raised reference rates by 25 basis points to the highest level in over two decades.
Since January 2022, Qatar has experienced an overall 5 percent or 500 basis points hike in interest rates.
The repo rate, which was 1 percent in January 2022, rose incrementally to reach 6 percent in July 2023. On the other hand, the QCB lending rate increased by 3.75 percent or 375 basis points since the start of 2022, reaching 6.25 percent in July of this year.
Interest rates on loans of various durations also saw adjustments. Loans less than one year increased to 6.51 percent in July 2023, up from 4.67 percent in July 2022. For loans with durations of one to three years, the rate reached 7.17 percent (compared to 3.82 percent). Meanwhile, for loans of more than three years, the rate stood at 6.81 percent (compared to 4.9 percent).
The QCB deposit rate also experienced a cumulative increase of 4.75 percent or 475 basis points since January 2022, reaching 5.75 percent in July 2023.
Specifically, rates for savings deposits have only been on a steady increase since March 2023, hitting 0.49 percent in July. On the other hand, the interest rates on demand deposits exhibited fluctuations over time, reaching 0.41 percent in July.
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