The Central Bank of the UAE (CBUAE) has decided to maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) without change at 5.40%.
This decision was taken following the US Federal Reserve's announcement on 31 January to keep the Interest on Reserve Balances (IORB) unchanged.
The CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at 50 basis points above the Base Rate for all standing credit facilities.
The Base Rate, which is anchored to the US Federal Reserve's IORB, signals the general stance of monetary policy and provides an effective floor for overnight money market interest rates in the UAE.
The US Federal Reserve held its key interest rate steady earlier Wednesday and opened the door to rate cuts but hinted that a March move is probably a long shot despite rapidly slowing inflation.
"In considering any adjustments to the target range for the federal funds rate, the (Fed) will carefully assess incoming data, the evolving outlook and the balance of risks," the central bank said.
The Fed confirmed in a statement that it was holding its benchmark lending rate steady at a 23-year high between 5.25 percent and 5.50 percent.
The Fed said the "risks to achieving its employment and inflation goals are moving into better balance."
But it added that its rate-setting committee is unlikely to start cutting interest rates "until it has gained greater confidence that inflation is moving sustainably" toward two percent.
Following a post-pandemic surge in inflation, fueled further by the Russian invasion of Ukraine, the Fed rapidly hiked interest rates to slow rising prices -- with surprising success.
The US central bank's favored inflation measure, which strips out volatile food and energy prices, has now fallen below an annual rate of 3.0 percent, while economic growth remained robust at 2.5 percent in 2023 and unemployment stayed close to historic lows.
"The data to date has been stunningly good," KPMG chief economist Diane Swonk wrote in a blog post this week.
Fresh data published Wednesday from ADP showed that private sector hiring has cooled more than expected this month, further underscoring the Fed's progress.
In its December rate meeting, the Fed raised its economic outlook for the year ahead, and signaled it expects as many as three quarter-percentage-point rate cuts in 2024, sparking optimism in financial markets that the central bank could cut rates as soon as March.
When the Fed lowers interest rates, US consumers get cheaper access to credit, meaning the cost of everything from car loans to mortgages falls, while company valuations see a boost.
In response, FOMC officials came out to pour cold water on such enthusiasm.
Once ramped up, the new centres are expected to each generate annual revenue of up to Dh200 million
Many residents opt for it in times of financial crunch and other urgent personal needs
Rents are projected to continue the upward trend across the country in 2024
The number of transactions carried out witnessed a significant increase compared to last year
The 57,000 sqm facility incorporates advanced technologies that include automated sort systems
Report notes that the GCC banking sector has experienced steady growth due to infrastructure projects, economic diversification efforts