The central banks of the UAE and Bahrain have raised key interest rate by 75 basis points effective from today. 

 

This follows the US Federal Reserve Board’s announcement yesterday to increase the Interest on Reserve Balances (IORB) by 75 basis points.

 

The Central Bank of Bahrain’s (CBB) key policy interest rate on the one-week deposit facility is raised from 2.50% to 3.25%, it said. 

 

The CBB has also decided to raise the overnight deposit rate from 2.25% to 3.00%, the four-week deposit rate from 3.25% to 4.00% and the lending rates from 3.75% to 4.50%. 

 

The CBB continues to monitor global and local market developments closely in order to take any further necessary actions to maintain monetary and financial stability in the Kingdom, it added.

 

Meanwhile, the Central Bank of UAE (CBUAE) raised the Base Rate applicable to the Overnight Deposit Facility (ODF) by 75 basis points.

 

The CBUAE also has decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE 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. It also provides an effective interest rate floor for overnight money market rates, it said.