The Central Bank of the UAE announced on Monday that it will cut interest rates, beginning 16th March, following US Federal Reserve cuts to contain the economic repercussions of coronavirus, COVID-19.
The statement issued by the Central Bank is in full below: Following the US Federal Reserve Board’s decision to cut the Federal Funds Rate at yesterday’s emergency meeting to contain the repercussions of the global pandemic COVID-19, the Central Bank of the UAE, CBUAE, effective from today, 16th March 2020, has decided as follows:
1. 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.
2. Maintain the Repo Rate, applicable to borrowing short-term liquidity from CBUAE against CDs at 50 basis points above the 1-week CD rate.
3. Reduce rates applicable to the Interim Margin Lending Facility, IMFL, and the Collateralised Murabaha Facility, CMF, by 50 basis points, to 50 basis points above the 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.