Abu dhabi: The Central Bank of the UAE (CBUAE) has decided to maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) at 3.65%. This decision follows the US Federal Reserve's announcement to keep the Interest Rate on Reserve Balances (IORB) unchanged.
According to Emirates News Agency, the CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at 50 basis points above the Base Rate for all standing credit facilities. This move reflects the CBUAE's strategy to align its monetary policy with that of the US Federal Reserve, thereby ensuring stability in the region's financial markets.
The Base Rate, anchored to the US Federal Reserve's IORB, signals the general stance of monetary policy and provides an effective floor for overnight money market interest rates in the UAE. The decision to maintain the Base Rate is crucial for financial institutions as it influences the cost of borrowing and lending, impacting the broader financial ecosystem in the country.