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QCB Interest Rates

QCB interest rate framework embraces three policy rates: QCB Deposit Rate (QCBDR), QCB Lending Rate (QCBLR), and QCB Repurchase Rate (QCB Repo or QCBRR).

QCBDR and QCBLR are the interest rates announced by QCB on overnight deposit and loan transactions between QCB and local banks through the Qatar Money Market Rate Standing Facility (QMR), respectively. The QCBLR is the key rate used by QCB to convey signals to the market revealing adjustments to its monetary policy stance.

The QMR facility is a double-featured monetary instrument encompassing two standing facilities, lending and deposits. All commercial banks operating in Qatar, can request access to the QMR facility where all transactions are executed electronically through the QMR system. Both facilities of the QMR are of various maturities ranging from 1 day (overnight) to 30 days with the primary objective of influencing the money market rates. Interest rates are fixed over the course of the day but (positively) vary with maturity over the 30 monetary-policy-day interval and are computed on a daily basis, based on QCBDR for deposit transactions and on QCBLR for loan transactions. Deposit and loan transactions per-bank per-day are subject to ceilings set by QCB.

Prior to January 22, 2006, the QMR facility was confined only to overnight transactions, where QCB announces QCBDR and QCBLR at the begging of each monetary-policy-day and where commercial banks can deposit with, and borrow from QCB overnight funds that can be extended to next day (rollover). Besides setting the initial interest rates (QCBDR and QCBLR), QCB also sets ceilings on deposit and loan transactions for individual bank utilizing the QMR facility. Effective lending and deposit rates are flexible over the course of day such that the lending rate is positively related to the total amount of funds available through the QMR lending facility, and the deposit rate is inversely related to the amount of fund available through the QMR deposit facility during the day. Therefore, movements in both interest rates, reflect the daily liquidity condition in the banking system as reflected by the amount of funds available through the QMR facility during the day.

Each Repo shall be for one week at minimum and may be renewed. The total amount of Repo should be limited to 2% of the banks outstanding private sector and customers. The government and semi-government deposits shall not be included within this limit.

Given the fixed parity between the Qatari riyal and the US dollar (USD), QCB short-term interest rates policies have had to be subordinated to the fixed exchange rate policy. As such QCB overnight interest rates are closely related to its counterpart on the USD, the Fed Funds Rate—usually with positive margin.

Name	Previous value	Current Value	Valid From
Required Reserve Percentage	4.75	4.50	01/04/2017
QMR O/N Deposit	5.50	5.75	27/07/2023
QMR O/N Lending	6	6.25	27/07/2023
Repo Rate	5.75	6	27/07/2023

QCB Required Reserve

Required Reserve Ratio is one of the earliest monetary policy instruments used in Qatar, where QCB requires the operating banks in Qatar to retain a percentage of their average total deposits as interest-free balances with QCB This percentage shall be calculated on basis of the average daily total deposits' balances with banks during the period from the 16th of each month to the 12th of the following month. The amount of the required reserve approved by QCB shall come into effect from the 15th of each month to the 14th of the following month Up to 2007, QCB used required reserve as a precautionary measure rather than being a monetary policy instrument.

Inflation

Inflation is defined as the continuous increase in the prices of goods and services. It is considered due to its negative Repercussions on the societies which run through inflation, whether socially or economically. One of the most serious inflation repercussions is the collapse of the monetary system in the country when hyperinflation occurs as in the case of Germany during the 1920s, although the experience gained throughout the recent decades has significantly reduced the probability of hyperinflation occurrence. There are several ways for measuring inflation in the local economy, the most important of which is measuring inflation gaps, money supply surplus, and price indices. The Ministry of Development Planning and Statistics in Qatar issues Consumer Price Index (CPI) on a monthly basis, which is used to calculate inflation rates in Qatar.

Head Inflation Rates (%)