The aircraft will serve short to medium haul cities, with Bahrain as its inaugural destination
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In line with the US Federal Reserve move, the central Bank of the UAE has raised the base rate applicable to the overnight deposit facility by 75 basis points to 2.4 per cent with effect from July 28, 2022.
The UAE central bank maintained the interest rate applicable to borrowing short-term liquidity from the regulator through all standing credit facilities at 50bps above the base rate, the regulator said on Wednesday.
The base rate, which is anchored to the US Federal Reserve’s interest on reserve balances, signals the general stance of the UAE’s central bank monetary policy and provides an effective interest rate floor for overnight money market rates.
The US Federal Reserve on Wednesday announced a 0.75 per cent hike in interest rate as part of its ongoing battle to tamp down price pressures that have been squeezing American families. This is the fourth Fed increase in policy rate this year indicating an aggressive strategy to contain inflation that topped nine per cent in June, the highest in more than 40 years .
Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), said the UAE economy will absorb interest rate hike due to higher oil revenues.
“The fast pace of interest rate hikes and the strong currency will be headwinds for the UAE’s non-oil activity, alongside the global growth risks. Nevertheless, we will continue to see the UAE in a strong economic position, supported by higher oil revenues, ongoing reforms and progress with strategic projects,” Monica told Khaleej Times on Wednesday.
GCC central banks follow Fed
Most central banks in the GCC followed the Fed's policy rate moves due to their currencies being pegged to the US dollar.
Kuwait was the first Gulf central bank to raised its key discount rate by 25bps to 2.5 per cent.
Saudi central bank Sama also decided to raise the repurchase agreement (Repo) rate by 75 basis points to three per cent from 2.25 per cent. It also increased the reverse repurchase agreement (reverse repo) rate to 2.5 per cent from 1.75 per cent.
The Central Bank of Qatar raised its main deposit rate by 75bps to three per cent while the repo rate was raised to 3.25 per cent. It also hiked the lending rate by 50bps to 3.75 per cent.
Bahrain’s central bank has also confirmed that interest rates will be higher by 0.75 per cent to 3.25 per cent with effect from July 28, 2022.
US central bankers are hoping that their aggressive stance will start to ease price pressure without derailing the world’s largest economy.
From zero at the start of the year, the Fed has raised the policy lending rate to a range of 1.5 to 1.75 per cent, which has pushed mortgage rates higher and slowed housing sales for five straight months.
— muzaffarrizvi@khaleejtimes.com
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