UAE Central Bank raises base rate to 3.9% after US Fed rate hike
CBUAE lifts its base rate by 25 basis points to 3.9%, effective September 17
Dubai: The UAE Central Bank has raised its base rate by 25 basis points to 3.9%, following a similar increase by the US Federal Reserve.
The Central Bank of the UAE said on Wednesday that the Base Rate applicable to its Overnight Deposit Facility will increase from 3.65% to 3.9%, effective Thursday, September 17.
The decision follows the US Federal Reserve’s announcement on September 16 to raise the Interest Rate on Reserve Balances by 25 basis points.
UAE rate tracks US Fed benchmark
The CBUAE Base Rate is anchored to the Federal Reserve’s Interest Rate on Reserve Balances and signals the general stance of monetary policy in the UAE.
It also provides an effective floor for overnight money market interest rates in the country.
The UAE dirham’s peg to the US dollar means the CBUAE’s base rate framework is linked to the Federal Reserve benchmark through the IORB.
Short-term borrowing rate maintained
The CBUAE also said it would maintain the interest rate applicable to short-term liquidity borrowed from the central bank at 50 basis points above the Base Rate across all standing credit facilities.
The decision means the Base Rate will stand at 3.9% from Thursday, compared with 3.65% previously.
