PHOTO
The UAE central bank maintained its benchmark interest rates on Wednesday night following the US Federal Reserve's decision to hold overnight interest rates steady within the 5.25%-5.50% range for the fourth time.
The Central Bank of UAE maintained its base rate on overnight deposits at 5.40%, it said in a late night statement. The monetary authority also maintained the rate applicable to borrowing short-term liquidity through all standing credit facilities at 50 basis points above the base rate.
Most central banks in the GCC usually track the Fed's policy rate moves as their currencies are pegged to the US dollar. Kuwait the only exception in the six-member economic bloc as its dinar is linked to a basket of currencies.
The Fed on Wednesday said that the rate-setting Federal Open Market Committee (FOMC) is unlikely to start cutting interest rates "until it has gained greater confidence that inflation is moving sustainably" toward 2%.
“The Fed holding interest rates has not come as a surprise as the US economy pulls off a remarkable ‘soft landing’ that many feared would be unachievable. The Fed had every reason to maintain the current rate given that inflation is approaching their 2% target, GDP grew more than expected, and the labor market remains resilient,” said Mahmoud Alkudsi, Senior Market Strategist at the Abu Dhabi-based brokerage ADSS.
(Writing by Brinda Darasha; editing by Seban Scaria)
