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ABU DHABI / WAM
The Central Bank of the UAE announced on Monday that it will cut interest rates, beginning March 16, following US Federal Reserve cuts to contain the economic repercussions of coronavirus.
Following US Federal Reserve Board’s decision to cut the Federal Funds Rate at an emergency meeting to contain the repercussions of the global pandemic Covid-19, the central bank of the UAE (CBUAE), effective from March 16, has decided to cut the interest rate applicable to the 1-week Certificates of Deposit (CDs), by 75 basis points, in line with the Federal Funds Target Rate – Upper Bound. The bank maintains Repo Rate, applicable to borrowing short-term liquidity from CBUAE against CDs at 50 basis points above 1-week CD rate. It reduced rates applicable to Interim Margin Lending Facility and Collateralised Murabaha Facility by 50 basis points, to 50 basis points above Repo Rate against CDs.
Certificates of Deposit, which CBUAE issues to banks operating in the country, are the monetary policy instrument through which changes in interest rates are transmitted to the UAE banking system.