UAE Central Bank raises base rate to 3.9% after US Fed rate hike
Dubai: The UAE Central Bank has raised its base rate by 25 basis points to 3.9%, following a similar increase by the US Federal Reserve . The Central Bank of the UAE said on Wednesday that the Base Rate applicable to its Overnight Deposit Facility will increase from 3.65% to 3.9%, effective Thursday, September 17. The decision follows the US Federal Reserve’s announcement on September 16 to raise…
The UAE Central Bank has increased its base rate by 25 basis points to 3.9%, mirroring a similar move by the US Federal Reserve. This decision was announced on Wednesday, September 17, with the new Base Rate for the Overnight Deposit Facility set to take effect on Thursday. The Central Bank of the UAE outlined that the rate change aligns with the US Federal Reserve’s Interest Rate on Reserve Balances, which they increased by the same amount on September 16.
The UAE's Base Rate tracks the Federal Reserve’s benchmark, indicating the overall tone of monetary policy in the country. The central bank maintains this key interest rate unchanged in July, in line with the US Federal Reserve's actions. Additionally, the UAE dirham remains pegged to the US dollar, meaning the CBUAE's base rate framework is indirectly linked to the Federal Reserve benchmark through the Interest Rate on Reserve Balances.
Despite the rate hike, the CBUAE stated they would retain the interest rate for short-term liquidity borrowed from the central bank at 50 basis points above the newly adjusted Base Rate. Consequently, the Base Rate will remain elevated at 3.9% from Thursday, up from its previous level of 3.65%.
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