UAE Central Bank raises base rate by 75 basis points

The Central Bank of the UAE (CBUAE) has raised the base rate applicable to the Overnight Deposit Facility (ODF) by 75 basis points, effective Thursday, June 16, 2022.

The decision was taken following the US Federal Reserve Board’s announcement on June 15, 2022 to increase the interest on reserve balances (IORB) by 75 basis points, official news agency WAM reported.

However, the country’s central bank has decided to maintain the rate applicable to borrowing short-term liquidity from it 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 and provides an effective interest rate floor for overnight money market rates.

Meanwhile, central banks across the GCC have also raised their benchmark interest rates.

The Saudi Central Bank has decided to raise the repurchase agreement (repo) rate by 0.5 per cent to 2.25 per cent from a previous 1.75 per cent, and the reverse repurchase agreement (reverse repo) rate by 0.5 per cent to 1.75 per cent from a previous 1.25 per cent.

#SAMA Decision on Repo and Reverse Repo Rate.https://t.co/aJR6SZ84gc pic.twitter.com/GE0UoZoCCi

— SAMA | البنك المركزي السعودي (@SAMA_GOV) June 15, 2022

The Central Bank of Bahrain (CBB) has also decided to raise its key policy interest rate. Its key policy interest rate on the one-week deposit facility is raised from 1.75 per cent to 2.50 per cent. Meanwhile, CBB has also decided to raise the overnight deposit rate from 1.5 per cent to 2.25 per cent, the four-week deposit rate from 2.50 per cent to 3.25 per cent and the lending rates from 3.00 per cent to 3.75 per cent.

CBB Raises Key Interest Rate by 75 basis points https://t.co/D1TzKB3Q8D pic.twitter.com/3TPP3vjeIc

— Central Bank of Bahrain (@CBB_News) June 15, 2022

Meanwhile, on June 16, 2022: Qatar Central Bank has decided to raise the QCB Deposit Rate (QCBDR) by 75 basis points to 2.25 per cent, raise the QCB lending rate (QCBLR) by 50 basis points to 3.25 per cent, and raise the QCB Repurchase Rate (QCB repo rate) by 75 basis points to 2.50 per cent.

The Central Bank of Kuwait (CBK) has also raised the discount rate by a quarter percentage point. The Governor of CBK Basel A. Al-Haroon, stated that the Board of Directors decided to raise the discount rate by 0.25 per cent from 2.00 per cent to 2.25 per cent effective June 16, 2022.

The CBK also decided to change the rates of monetary policy instruments by varying percentages for the entire interest rate yield curve, including repurchases (repo), CBK bonds and tawarruq, term deposits, direct intervention instruments, as well as public debt instruments.

CBK Raises Discount Rate by a Quarter Percentage Point to 2.25%https://t.co/fb0wIpBaI9 pic.twitter.com/P85PyFMMfq

— بنك الكويت المركزي | CBK (@CentralBank_KW) June 15, 2022