Abu dhabi: The Central Bank of the UAE (CBUAE) has decided to cut the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25 basis points, from 3.90% to 3.65%, effective from Thursday, 11 December. This move aligns with changes in monetary policy following the recent actions of the US Federal Reserve.
According to Emirates News Agency, the decision was made after the US Federal Reserve announced a reduction of 25 basis points in the Interest Rate on Reserve Balances (IORB). The CBUAE's adjustment reflects this change and maintains a consistent policy approach with the US monetary framework.
Additionally, the CBUAE has opted to keep the interest rate for borrowing short-term liquidity from the CBUAE at 50 basis points above the Base Rate for all standing credit facilities. This measure ensures stability in the borrowing costs for financial institutions in need of short-term funds.
The Base Rate, linked to the US Federal Reserve's IORB, serves as an indicator of the overall monetary policy direction and establishes a benchmark for overnight money market interest rates in the UAE. This adjustment is anticipated to influence economic activities by adjusting the cost of borrowing within the country.