UAE central bank hikes rates by 25 bps after Fed decision – News

The base rate linked to the Fed’s IORB signals the overall stance of the CBUAE’s monetary policy

The Central Bank of the United Arab Emirates (CBUAE) has decided to increase the benchmark interest rate applicable to the Overnight Deposit Facility (ODF) by 25 basis points from 4.65% to 4.90%, effective Thursday, March 23, 2023.

The decision follows the US Federal Reserve Board’s announcement on March 22, 2023, to increase interest on reserve balances (IORB) by 25 basis points.

The CBUAE also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE, through all standing credit facilities, at 50 basis points above the benchmark rate.

The benchmark interest rate is linked to the Federal Reserve’s IORB, indicating the overall stance of the CBUAE’s monetary policy. It also provides an effective interest rate floor for overnight money market rates.