The UAE Central Bank reduces interest rates by a quarter of a percentage point

The Central Bank of the United Arab Emirates decided to reduce the “base rate” on overnight deposit facilities by 25 basis points, from 4.65% to 4.40%, effective Thursday, December 19.

This decision comes following the Federal Reserve’s announcement of reducing the interest rate on reserve balances by 25 basis points at its meeting held today.

The Central Bank also decided to maintain the rate applicable to borrowing short-term liquidity from the Central Bank through all existing credit facilities at 50 basis points above the base rate.

The base rate, which is linked to the interest rate on reserve balances approved by the US Federal Reserve, determines the general stance of monetary policy, and also provides a minimum effective interest rate for overnight money market rates in the country.