UAE Central Bank increases base rate

UAE Central Bank increases base rate

Other GCC states also hike rates after US Federal Reserve move

By Web Desk Published: Wed 4 May 2022, 10:59 PM Last updated: Wed 4 May 2022, 11:37 PM

The Central Bank of the UAE (CBUAE) said on Wednesday it decided to increase its base rate by 50 basis points to 2.25% effective from Thursday, in lockstep with the US Federal Reserve's move as it seeks to fend off inflation at multi-decade highs.

The bank said it would maintain the rate on borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 bps above the base rate.

Other Gulf central banks also hiked their main interest rates on Wednesday as the US Federal Reserve raised its target policy rate by 50 basis points in the face of inflation at highs not seen in decades.

All Gulf countries have their currencies pegged to the US dollar, except Kuwait, which pegs the Kuwaiti dinar to a basket of currencies that includes the dollar.

The central banks of Saudi Arabia, Qatar and Bahrain raised their key rates by 50 bps.

The Central Bank of Kuwait said it increased its discount rate by 25 basis points (bps) to 2%, in a move less hawkish than the Fed’s.

The Saudi