The Central Bank of the UAE maintained the Base Rate for the Overnight Deposit Facility at 3.65%, aligning its stance with global monetary conditions.
This move follows the US Federal Reserve’s decision to keep the Interest Rate on Reserve Balances unchanged. As a result, the UAE’s monetary policy framework remains closely linked to US rate signals.
Moreover, the central bank also kept the rate for short-term liquidity borrowing unchanged. This rate remains set at 50 basis points above the Base Rate across all standing credit facilities. Therefore, borrowing costs for banks accessing central bank liquidity continue at existing levels.
Base Rate anchors market expectations
The Base Rate remains anchored to the US Federal Reserve’s IORB, ensuring policy alignment between the two systems. Additionally, it serves as a key signal of the overall monetary policy stance.
Furthermore, the rate provides an effective floor for overnight money market interest rates in the UAE. As a result, it continues to guide liquidity conditions and short-term interest rate movements across the financial system.
