UAE Central Bank increases interest rate: How will it affect residents?

UAE Central Bank increases interest rate: How will it affect residents?

Consumers will feel the sting of the increase in prices and interest rates soon

By A Staff Reporter Published: Thu 5 May 2022, 12:47 PM Last updated: Thu 5 May 2022, 1:58 PM

In line with the US Federal Reserve's move, the Central Bank of the UAE raised its base rate by 50 basis points to 2.25 per cent effective from Thursday. Twelve major central banks of emerging and developed markets raised interest rates in 2021 and initiated the same practice this year to contain inflation, which surged to multi-decade highs in the US and other major economies of the world.

Here's all you need to know about what effect the hike will have in the Emirates.

How will the UAE Central Bank's move impact consumers?

The interest rate hike will be reflected in equated monthly instalments (EMIs) on home, vehicle and other personal and corporate loans. Consumers will have to pay higher EMIs, as higher rates will make it more expensive to buy a home/car or carry a credit card balance.

How expensive will credit cards get?

Credit card holders, with a good credit history, will pay 18 per cent interest rate on average annually. This will be subject to increases in line with every hike