Abu dhabi: The Central Bank of the UAE (CBUAE) has decided to raise the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25 basis points, from 3.65% to 3.9%, effective from Thursday, 17 September. This move comes in the wake of recent monetary policy adjustments by the US Federal Reserve.
According to Emirates News Agency, the decision was taken following the US Federal Reserve's announcement to raise the Interest Rate on Reserve Balances (IORB) by 25 basis points. This alignment with the US Federal Reserve's policy indicates a coordinated effort to manage monetary conditions effectively.
Furthermore, the CBUAE has 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. This measure aims to ensure that sufficient short-term liquidity is available to financial institutions within the UAE.
The Base Rate, which is anchored to the US Federal Reserve's IORB, serves as an indicator of the general stance of monetary policy. It also provides an effective floor for overnight money market interest rates in the UAE, ensuring stability and predictability in the financial sector.