The Central Bank of the UAE (CBUAE) has decided to cut the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25 basis points, from 4.90% to 4.65%, effective from Friday, 08 November.
This decision was taken following the US Federal Reserve’s announcement today to reduce the Interest Rate on Reserve Balances (IORB) by 25 basis points.
The CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at 50 basis points above the Base Rate for all standing credit facilities.
The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of monetary policy and provides an effective floor for overnight money market interest rates in the UAE.
The US Federal Reserve earlier on Thursday announced its second interest rate cut of 2024, trimming its benchmark rate by 0.25 percentage points amid cooling inflation.
The Fed cut, half the size of its September reduction, lowers the federal funds rate — the interest rate banks charge each other for short-term loans — to a range of 4.5% to 4.75% from its current 4.75% to 5% level.
News Source: Emirates News Agency
