Central Banker Report Cards 2025: Middle East
As central banks prepare for 2026 inflation, a consensus on how to tackle it remains elusive. Global Finance presents the 2025 Central Banker Report Cards for the Middle East.
The smallest economy in the Gulf Cooperation Council (GCC), Bahrain, remains stable, with expected GDP growth of 3.5% this year and inflation below 1%. The Bahraini dinar is pegged to the US dollar, and the Central Bank of Bahrain's (CBB) monetary policy aligns with that of the Federal Reserve.
Following the Fed's cut in September, the CBB reduced the overnight deposit rate by 25 basis points to 4.75%. However, the World Bank notes that
Bahrain could face tighter financial conditions from trade-related inflationary pressures and disrupted global supply chains, despite the peg remaining an appropriate instrument.
Bahrain was among the first Middle Eastern countries to diversify its economy away from oil rents decades ago.
Author's summary: Bahrain's economy remains stable amidst global uncertainty.