UAE, Qatar central banks keep rates unchanged in tandem with Fed move

The UAE and Qatar central banks have kept the interest rates unchanged, following the U.S. Federal Reserve’s move on Wednesday.

The Fed’s FOMC left rates untouched at 5.25 per cent -5.5 per cent, attributing the decision to the expanding economic activity, low unemployment rate, and eased inflation. Fed Chair Jerome Powell hinted that officials likely will not start lowering rates at the next policy meeting in March.

UAE

The Central Bank of the UAE (CBUAE) decided to maintain the base rate applicable to the overnight deposit facility (ODF) without change at 5.40 per cent. The CBUAE also decided to maintain the interest rate applicable to borrowing short-term liquidity from the bank at 50 basis points above the base rate for all standing credit facilities.

The base rate, which is anchored to the U.S. Federal Reserve’s Interest on Reserve Balances (IORB), signals the general stance of monetary policy and provides an effective floor for overnight money market interest rates in the UAE.

Qatar

The Qatar Central Bank’s (QCB) monetary policy committee decided to maintain the current interest rates for the QCB deposit rate, lending rate, and repo rate at 5.75 per cent, 6.25 per cent, 6.00 per cent, respectively. The QCB explained in a statement that the decision followed an assessment of the country’s current monetary requirements.

“The Qatar Central Bank will continue to assess the appropriate monetary policy, taking into account all the factors that may impact financial stability, and will periodically review its monetary policy as needed to address changes in economic requirements.”

In 2023, Qatar’s inflation falls to 2.84 per cent, compared to 5 per cent in 2022. The country’s money supply (M2) reached a record of 722 billion riyals in 2023 buoyed by an increase in foreign currency deposits.