1. The US Federal Reserve decided to raise its policy interest rate by 0.25 percentage point, by shifting the target band of Federal Funds rate from 0.00-0.25% to 0.25% to 0.50% on the 16 of December. It marked the first change in the US policy interest rate since 2008 and the first hike in policy interest rate since 2006 (See Chart 1).
2. A change in the US policy interest rate impacts the monetary policy stance of those countries whose national currencies are pegged to the US Dollar. In the Arab region, Bahrain, Jordan, Lebanon, Oman, Qatar, Saudi Arabia, UAE are, either official or unofficially, pegged their national currencies to the US Dollar. Kuwait pegs its national currency to a basket of currencies in which US Dollar shares a significant weight.