Dubai: The UAE central bank has increased the base rate on the Overnight Fund (ODF) by 5 basis points since Thursday (June 17). This decision was taken after the announcement by the US Federal Reserve to increase the interest on excess reserves (IOER) by 5 basis points. The new base rate set by the CBUAE is 15 basis points. The UAE regulator has also decided to maintain the rate applicable to short-term borrowing from the CBUA by all existing credit facilities at 50 basis points above the base rate.
“The base rate, which is anchored to the US Federal Reserve’s IOER, indicates the general position of the CBUAE’s monetary policy,” the bank said in a statement. “It also provides an effective interest rate floor for overnight money market rates.”