UAE keeps key interest rate unchanged in October, mirroring US Fed move

The U.S. Federal Reserve maintained its benchmark interest rate at 3.75-4.00 percent on Wednesday, following a quarter percentage point hike last month, according to wire reports. The Federal Open Market Committee (FOMC) decided to keep the rate within the range in a 10-2 vote during the two-day meeting. The Fed stated that it continues to maintain ample reserves in the banking system.

Last month, the central bank raised its benchmark interest rate by 0.25 percent in its first hike since July 2023, signaling the possibility of further increases later in the year to combat persistent inflation and high oil prices. The Fed's decision left the gap between its key interest rates and South Korea's at up to 1 percentage point.

The move was consistent with market expectations. Pacific Investment Management Co. (PIMCO) had projected last week that the Fed would maintain rates steady in its October meeting before raising them again in December. The economy is expanding at a robust pace, with domestic spending resilient, strong productivity growth, and robust capital investment.

Job gains have kept pace with the workforce, and the unemployment rate has remained unchanged. The Fed noted that additional information and data will assist the FOMC in determining the appropriate policy stance to ensure inflation returns to its 2 percent goal in a timely manner.