Decision to appeal foreign investors

The UAE Central Bank's decision not to follow the US Federal Reserve and cut interest rates should be good for the financial health of the emirates.

Yesterday the US Federal Reserve cut its overnight interest rates to a record low of 0.25 per cent, and there was some hope that the UAE Central Bank would follow and make money cheaper for local banks, and possibly their customers.

But, by keeping UAE interest rates slightly higher than those in the US, the Central Bank will make it more appealing for foreign investors to put their money in the emirates.

This is a calculated risk. Given how nervous international investors are at the moment, they might prefer to keep their money in perceived safe havens, like the US, even though they can earn higher returns off-shore. But, for many investors, the UAE is still seen as a safe bet.