The UAE Central Bank has raised its benchmark borrowing rate following a similar move by the US Federal Reserve.
CBUAE has decided to raise the Base Rate applicable to the Overnight Deposit Facility (ODF) by 50 basis points – from 3.9% to 4.4%, effective from Thursday, 15 December 2022.
This decision was taken following the US Federal Reserve Board’s announcement on December 14 to increase the Interest on Reserve Balances (IORB) by 50 basis points.
Central banks hike rates
The CBUAE also has decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the Base Rate.
The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy. It also provides an effective interest rate floor for overnight money market rates.
The central banks of Saudi Arabia (Sama), Bahrain, and Qatar also increased their interest rates following the US Federal Reserve Board’s announcement.
Sama, the Central Bank of Bahrain and QCB upped their interest rates by 50 basis points in statements.
The Board of Directors of the Central Bank of Kuwait (CBK) had decided to raise the discount rate by 0.50% from 3.00% to 3.50% effective December 7, 2022.
Source:https://www.arabianbusiness.com/politics-economics/gulf-central-banks-hike-interest-rates-following-feds-increase