UAE Central Bank raises base rate by 50 basis points

The Central Bank of the UAE (CBUAE) has decided to raise the Base Rate applicable to the Overnight Deposit Facility (ODF) by 50 basis points, following the US Federal Reserve hike.

The hike has pushed the rate from 3.9 per cent to 4.4% per cent, effective from Thursday, December 15, 2022.

This decision was taken following the US Federal Reserve Board’s announcement on December 14, to increase the Interest on Reserve Balances (IORB) by 50 basis points.

Meanwhile, the CBUAE 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 base rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy, official news agency WAM reported.

The US Federal Reserve raised its key interest rate by 50 basis points on Wednesday. “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-1/4 to 4-1/2 percent,” said Federal Reserve issues FOMC statement.

Central banks across the GCC have also raised interest rates in line with the US Federal Reserve’s rate hike.