UAE raises base rate by 25 basis points
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UAE central Bank raises base rate by 25 basis points

UAE central Bank raises base rate by 25 basis points

The central banks of Saudi Arabia and Bahrain also increased their interest rates after the US Federal Reserve raised its target interest rate

Gulf Business
UAE central bank raises base rate _ feb 2023

The Central Bank of the UAE (CBUAE) has decided to raise the base rate applicable to the overnight deposit facility (ODF) by 25 basis points – from 4.4 per cent to 4.65 per cent, effective from Thursday, February 2.

This decision was taken following the US Federal Reserve Board’s announcement on February 1 to increase the Interest on Reserve Balances (IORB) by 25 basis points.

“Inflation has eased somewhat but remains elevated,” the US central bank 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, reported state news agency, WAM.

The base rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy. It also provides an effective interest rate floor for overnight money market rates.

Read: UAE Central Bank raises base rate by 50 basis points in December

Saudi Arabia and Bahrain

The central banks of Saudi Arabia and Bahrain also increased their interest rates after the US Federal Reserve raised its target interest rate.

The Saudi Central Bank, also known as Sama, and the Central Bank of Bahrain upped their interest rates by 25 basis points, according to statements published on February 1, WAM reported.

The central bank of Qatar has decided against raising rates. The bank maintained its lending rate at 5.50 per cent; deposit rate at 5  per cent and repo rate at 5.25 per cent respectively, the state news agency QNA said on Twitter.

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