Borrowing in Saudi Arabia won't get cheaper anytime soon, after the US central bank kept rates high and signalled more increases could follow.
The Federal Reserve held its benchmark rate at 3.75% to 4% on Wednesday. Two of its 12 voters, Governor Lisa Cook and Cleveland Fed President Beth Hammack, wanted to raise it.
The Fed already raised rates in September, its first increase since 2023.
Why a US decision matters here
The riyal has been pegged at 3.75 to the dollar since 1986. To protect that peg, Saudi Arabia's central bank usually moves its rates in step with the Fed.
So when Washington holds, Riyadh's borrowing costs hold too. That covers home mortgages, car loans and the credit lines companies use to fund projects.
The war is behind it
The Fed is worried about inflation, which is running about one percentage point above its 2% target. Energy prices, pushed up by the Iran war, are a big reason.
In other words, the same Hormuz shock that is squeezing Gulf exports is keeping money expensive for Gulf borrowers.
What it means for you
Homebuyers: No relief on mortgage rates yet.
Companies: Debt stays expensive, as the government faces a projected deficit of 245 billion riyals ($65 billion) this year.
Savers: Deposit rates stay attractive.
Stocks: High rates tend to weigh on share prices, as Saudi stocks try to hold above 10,000 points.
What's next
Investors now expect the Fed to start raising rates again in December. If it does, Saudi borrowing costs will likely follow.
