Central Bank of UAE hikes base rate by 25 bps after US Fed move

The Central Bank of the UAE (CBUAE) has raised the Base Rate applicable to Overnight Deposit Facility (ODF) by 25 basis points – from 4.4 per cent to 4.65 per cent, effective from today.

The decision comes a day after the US Federal Reserve Board announced its move to increase the Interest on Reserve Balances (IORB) by 25 basis points.

The bank would also maintain the rate on borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the Base Rate.

Meanwhile, the central banks of Saudi Arabia and Bahrain have also upped their interest rates by 25 basis points.

The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy. It also provides an effective interest rate floor for overnight money market rates.