The Central Bank of the UAE (CBUAE) has announced a 25 basis point reduction in its Base Rate for the Overnight Deposit Facility (ODF), bringing it down from 4.65% to 4.40%. The revised rate will take effect on Thursday, December 19.
This move aligns with the US Federal Reserve’s decision to lower its Interest Rate on Reserve Balances (IORB) by 25 basis points, as announced earlier today. The Base Rate adjustment reflects the CBUAE’s commitment to maintaining alignment with the Fed’s monetary policy, given the UAE dirham’s peg to the US dollar.
Additionally, the CBUAE stated that it will continue to apply an interest rate of 50 basis points above the Base Rate for borrowing short-term liquidity through its standing credit facilities.
The Base Rate serves as a key indicator of the monetary policy stance in the UAE, providing an effective floor for overnight money market interest rates. Anchored to the US Federal Reserve’s IORB, it plays a vital role in maintaining monetary stability and supporting economic growth in the UAE.
This policy adjustment underscores the interconnected nature of global monetary systems and highlights the UAE’s responsiveness to international financial developments.
News Source: Emirates News Agency
