The UAE’s Central Bank maintained its benchmark borrowing rate, coinciding with the US Federal Reserve’s decision to pause its tightening cycle after increasing interest rates to their highest in 16 years to control inflation and stabilise prices.
The Fed increased its benchmark rate for the 10th consecutive time last month. It maintained its range of five percent to 5.25 percent.
Over the past 15 months, it raised rates by combined 500 basis points – the highest since 2007, shortly before the onset of the financial crisis in 2008. The Fed has now paused it to assess the effects of the tightening cycle on the economy.
Following the US Federal Reserve Board’s announcement to keep the Interest on Reserve Balances (IORB) unchanged, the Central Bank of the UAE (CBUAE) has followed suit and maintained the Base Rate applicable to the Overnight Deposit Facility (ODF).
Announcing this on Wednesday after the decision of the Fed, CBUAE maintained the rate at 5.15 percent.
The CBUAE has also decided to maintain the rate applicable to borrowing short-term liquidity through all standing credit facilities at 50 basis points above the Base Rate.