The Central Bank of Kuwait kept its key discount rate unchanged at 3.50% in September 2026, noting that current indicators point to the “soundness and strength of monetary and financial stability” in the country. Gulf oil and gas exporters typically track the US Federal Reserve’s policy moves, as most regional currencies are pegged to the US dollar. Kuwait is a notable exception: the Kuwaiti dinar is pegged to a basket of currencies that includes the dollar rather than to the dollar alone.
Following the Fed’s latest rate hike, most central banks in the Gulf Cooperation Council raised their benchmark interest rates. Kuwait’s economy, however, is forecast to shrink by 8.1% this year. The contraction is largely attributed to the war involving Iran, which has disrupted energy shipments through the near-closure of the Strait of Hormuz, damaged energy production facilities, and depressed regional traffic, weighing heavily on tourism and business activity across the Gulf.
