Since its inception in 1993, Qatar Central Bank (QCB) inherited the Qatar Monetary Agency’s monetary framework of targeting the exchange rate. The formal framework for the exchange rate policy is a fixed parity between the Qatari riyal (QR) and the United States dollar (USD) at QR 3.64 per USD. Hence, the de facto QCB’s monetary policy objective is to keep the QR stable against the USD. Consequently, QCB’s monetary policy is drawn and implemented to manage the short-term interbank rates with a view to sustain the fixed parity between the QR and the USD. The current QCB interest rates framework focuses on the average overnight interbank rate (AOIR) as the operating target. The aim is to align the AOIR within the QCBDR through liquidity management operations. The key liquidity concept in this monetary policy operation is the commercial banks‘current-deposits account with QCB, since these funds can be immediately used as a means of payment at the initiative of banks. The aggregate of this current-deposits account is referred to as “primary liquidity” or “QR liquidity”.
Monetary Policy Committee
The primary responsibility of Monetary Policy Committee (MPC) is the formulation and implementation of QCB’s monetary policy. The Governor chairs the MPC. DG is the Deputy Chairman and the other members are Heads of Financial System Stability and Statistics Sector, Financial Markets Sector, and Public Debt and Issuance and Banking Affairs Sector. The Macroeconomic Research Department at the Financial System Stability and Statistics acts as the Secretariat of the MPC.
The MPC meets every three months and additional meetings are held, if required. Monetary Policy Division at the Macroeconomic Research Department continuously monitors the QR interest rates in the context of developments in the international interest rates, in particular, the US Federal Funds Rate, and reports to the MPC. Decisions taken by the MPC are announced to commercial banks operating in Qatar electronically and to non-bank public via QCB website and local media.
Monetary Policy Tools
QCB rate is the interest or return rate set by Qatar
Central Bank (QCB) for the daily transactions in the Qatar Money Market (QMR) i.e.,
it is the official short-term (Overnight) interest rate on lending ”Qatar
Central Bank Lending Rate (QCBLR)” and on deposits “Qatar Central Bank Deposit
Rate (QCBDR)”. Using both QCBLR and QCBDR through the QMR mechanism, local
banks can (electronically) borrow from, and deposit with QCB for overnight