Qatar has just announced a rate cut of 75 bp (basis points) on its depository facility rate to 2.25%. Thus far Saudi Arabia, Bahrain and now Qatar have been forced to lower their rates, despite rising inflation, to match the Fed cuts made in the previous week.
Annual inflation in Qatar has risen to 13.74% in December 2007. The second highest rate on record as food and rent costs surged in the economy. The Gulf central banks are torn between efforts to fight inflation and prevent appreciation of their dollar pegged currencies.
Speculation on the Gulf currencies revaluation has been seen to increase as inflationary pressures push the countries in to rapid reformation of their monetary policies. As of now the Qatari Riyal forward contract is has appreciated 3.9% to 3.4989 per dollar in a year.
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