The Central Bank of the UAE (CBUAE) has announced that it will maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) at 4.40 percent. This move aligns with the latest decision by the U.S. Federal Reserve to keep the Interest Rate on Reserve Balances (IORB) unchanged.
Policy Anchored to U.S. Federal Rate
Since the Base Rate is anchored to the U.S. Federal Reserve’s IORB, CBUAE’s decision reflects a consistent monetary stance. As a result, the Base Rate continues to serve as an effective floor for overnight money market interest rates across the UAE. This alignment ensures that the country’s monetary policy remains stable, despite broader global economic uncertainties.
Short-Term Borrowing Costs Unchanged
In addition to holding the Base Rate steady, the CBUAE has also opted to keep the interest rate for short-term liquidity borrowing unchanged. This rate will remain at 50 basis points above the Base Rate for all standing credit facilities. By maintaining both rates, the CBUAE aims to support liquidity conditions while reinforcing monetary policy effectiveness across the UAE’s banking system.
