The US Federal Open Market Committee (FOMC) kept its interest rates steady in a range of 5.25 – 5.5 percent after the end of its two-day meeting on Wednesday.
The committee’s decision, taken unanimously, is in continuation of its July stance and in line with the market expectation.
The Fed, however, forecast an additional rate hike before the end of the year to bring down inflation.
Fed policymakers at the median still see the central bank’s benchmark overnight interest rate peaking this year in the 5.50 percent-5.75 percent range, just a quarter of a percentage point above the current range.
The Federal Reserve raised interest rates to their highest level in 22 years in July, with all members of the rate-setting committee having voted in favor of the move.
CBUAE holds interest rates steady
Following the US Fed move, the Central Bank of the UAE (CBUAE) has also decided to maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) without change at 5.40 percent, effective from Thursday, September 21.
The CBUAE also has decided to maintain the rate applicable to borrowing short-term liquidity from the central bank through all standing credit facilities at 50 basis points above the Base Rate.
The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy.
It also provides an effective interest rate floor for overnight money market rates in the UAE.
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