UAE Central Bank Mirrors Fed Decision, Keeps Interest Rates Unchanged

UAE Central Bank interest rates unchanged

In response to the US Federal Reserve Board's recent announcement to leave key interest rates unchanged, the Central Bank of the UAE (CBUAE) has opted to keep the Base Rate for the Overnight Deposit Facility steady at 5.40%. This decision, effective from September 21, 2023, reflects the CBUAE's commitment to its current interest rate policy.

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Additionally, the CBUAE has chosen to retain the rate applicable to borrowing short-term liquidity from the central bank through all standing credit facilities, set at 50 basis points above the Base Rate.

While the US Federal Reserve opted for no rate changes, a widely anticipated move, it did signal a potential rate hike later this year. This suggests that borrowing costs may remain elevated for a longer duration.

Federal Reserve Chairman Jerome Powell stated, "Officials are prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective," following the Federal Open Market Committee meeting.

Given that most Gulf Cooperation Council (GCC) central banks peg their currencies to the US dollar, they often align their interest rate policies with the decisions of the US Federal Reserve.

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