The Central reduces interest for the first time since March 2022

For the first time since March 2022, the Central Bank reduced, the evening of yesterday, the main interest rate by 25 basis points, coinciding with a similar step by the US Federal Reserve (US Central Bank), due to the policy of linking the dirham to dollars.

The reduction came in line with the expectations 11 consecutive times, followed by eight times of “installation”, which included one time lifting.

A banking expert told «Emirates Today» that reducing the interest rate would reduce the current real estate financing premiums at a rate of between 160 and 180 dirhams per month per million dirhams of financing over a 25 -year period.

In detail, the central bank reduced, the evening of yesterday, the main interest rate by 25 basis points, for the first time of March 2022, after 11 consecutive times, followed by eight times of the installation, which included one time lifting.

The “Central” said, in a statement, that he decided to reduce the “basis price” on one -night deposit facilities by 25 basis points, from 4.40% to 4.15%, as of yesterday, September 18.

This decision comes after the US Federal Reserve announced, reduced the interest rate on the reserve balances by 25 basis points, at its meeting that was held the day before yesterday.

The “Central” also decided to keep the price that applies to borrowing short -term liquidity from the central bank, through the existing credit facilities at 50 basis points above the basis price.

The basis price, which is linked to the interest rate on the reserve balances approved by the “American Federal Reserve”, determines the general position of monetary policy, and also provides a minimum end for the actual interest rate of the price of the bank’s monetary for one night in the country.

Commenting, the banking expert, Ahmed Arafat, said that reducing the interest rate would increase the demand for various financing, especially the real estate, as it stimulates the rest of the types of financing, explaining that the current real estate financing premiums will decrease at a rate of between 160 to 180 dirhams per month per million dirhams for a period of 25 years, as long as the years of installation agreed with the bank financier exceeded the first three or five years.

Arafat pointed out that the price of “Iber” (the interest rate on transactions between banks) witnessed, over the past years, a significant increase, and it was also installed several times, then the first reduction came by 25 basis points, which is a small percentage, and if expectations agreed.

• Reducing by 25 basis points came 11 consecutive times after lifting, followed by 8 times of installation permeated one time lifting.