Dubai – The Central Bank of the UAE (CBUAE) has announced that it will maintain the base rate for the Overnight Deposit Facility (ODF) at 4.40%, following the US Federal Reserve’s decision to keep its Interest Rate on Reserve Balances (IORB) unchanged.
In a statement released Wednesday night, the CBUAE confirmed that it would also maintain the interest rate on short-term borrowing from the central bank at 50 basis points above the base rate for all standing credit facilities.
Monetary Policy Linked to US Fed Moves
The UAE’s monetary policy is closely tied to the US Federal Reserve due to the dirham’s peg to the US dollar. The Base Rate, which is anchored to the US Fed’s IORB, plays a key role in guiding monetary policy and serves as the benchmark for overnight money market interest rates in the UAE.
The Federal Reserve’s decision to hold interest rates steady reflects its ongoing assessment of inflation, economic growth, and labor market conditions in the US. As a result, the UAE's central bank has aligned its policy to maintain financial stability and support liquidity in the banking sector.
This decision comes amid a global economic landscape of high interest rates, with central banks worldwide carefully monitoring inflation trends before making any major policy shifts.
