Image: WAM
The Central Bank of the UAE (CBUAE) has announced a 25 basis point reduction in the base rate applicable to the overnight deposit facility (ODF), effective December 19, 2024.
This decision brings the ODF rate down from 4.65 per cent to 4.40 per cent.
The move follows the US Federal Reserve‘s decision to lower the interest rate on reserve balances (IORB) by 25 basis points on December 18.
In addition to adjusting the ODF rate, the CBUAE has opted to keep the interest rate for borrowing short-term liquidity from the central bank at 50 basis points above the base rate for all standing credit facilities.
The base rate, which is closely linked to the US Federal Reserve’s IORB, serves as a key indicator of the CBUAE’s monetary policy stance. It also acts as a floor for overnight money market rates within the UAE.
The decision is expected to influence lending rates and liquidity conditions across the country.
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