The Central Bank of the UAE (CBUAE) has chosen to keep the Base Rate, which applies to the Overnight Deposit Facility (ODF), unchanged at 5.15% starting from June 15, 2023.
UAEBARQ reports that the US Federal Reserve Board made the decision to maintain the Interest on Reserve Balances (IORB) without any adjustments, leading to this response. After over a year, the central bank has chosen to refrain from increasing the federal funds rate, keeping the crucial benchmark within its existing range of 5% to 5.25%.
Additionally, the CBUAE has decided to retain the rate for borrowing short-term liquidity from the CBUAE through standing credit facilities at a level 50 basis points higher than the Base Rate. The Base Rate, which is linked to the US Federal Reserve’s IORB, reflects the general direction of the CBUAE’s monetary policy. It also establishes a minimum interest rate for overnight money market rates in the UAE.
Aiming for Stability: US Federal Reserve’s Strategic Monetary Environment
In pursuit of its objectives, the US Federal Reserve Board focuses on attaining maximum employment levels and strives to maintain inflation at a sustainable rate of 2 percent over the longer term. To uphold these goals, the US Federal Reserve Board has recently made the decision to keep the target range for the federal funds rate unchanged at 5 to 5-1/4 per cent.
On Wednesday, the Federal Reserve made an announcement stating that it will keep interest rates unchanged at their current levels. This decision marks the end, at least for now, of a series of 10 consecutive rate hikes that began in March 2022, with the intention of combating inflation.
By carefully assessing economic indicators and closely monitoring market conditions, the US Federal Reserve Board aims to foster a stable and conducive monetary environment that supports sustainable economic growth, while also ensuring that inflation remains well within the desired range.