UAE Central Bank holds interest rates steady as US Fed hits pause on hikes

Image credit: WAM

The UAE Central Bank announced that it is keeping its interest rate unchanged.

“The Central Bank of the UAE (CBUAE) has decided to maintain the base rate applicable to the overnight deposit facility (ODF) without change at 5.40 per cent,” it said in a statement.

“The CBUAE also has decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the base rate.”

The #CentralBankUAE has decided to maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) without change at 5.40 per cent, effective from Thursday, 21 September 2023. pic.twitter.com/i9Qiw0eFw0

— Central Bank of the UAE (@centralbankuae) September 20, 2023

The notification from CBUAE comes after the US Federal Reserve announced that it is maintaining its key policy rate unchanged.

US Fed keeps interest rates steady

The Fed’s decision to keep its key lending rate between 5.25 per cent and 5.50 per cent gives policymakers time to “assess additional information and its implications for monetary policy”, the central bank said in a statement.

The rates are at a 22-year-high, and it is the second time the Fed has kept rates unchanged.

However, it has forecast an additional rate hike before the end of the year as the US economy continues to see high inflation, much beyond the target of 2 per cent.

The Fed has conducted 11 interest rate hikes since March last year, and dampened inflation but recent data still puts it around 3.7 per cent mark, keeping pressure on officials to consider further policy action.

Also read: GCC central banks raise interest rates in lockstep with the US Fed