The Central Bank of the UAE (CBUAE) announced a 25 basis point reduction in its overnight deposit facility (ODF) rate, bringing it down from 4.90% to 4.65%, effective Friday, November 8. This adjustment comes in response to the U.S. Federal Reserve’s recent decision to reduce its key lending rate by a quarter of a percentage point.
The Fed’s rate cut, enacted on Thursday, marked a continued easing of monetary policy amidst a cooling inflation landscape in the U.S. The move was also a nod to recent economic indicators showing a slight softening in labor market conditions. In a unanimous vote, the Federal Open Market Committee (FOMC) adjusted the Fed’s target range to 4.50% – 4.75%, emphasizing a focus on sustaining economic stability.
By mirroring the Fed’s rate cut, the UAE Central Bank aims to maintain economic alignment with the U.S. dollar, supporting domestic economic stability. The decision reflects the UAE’s monetary policy approach of pegging its currency to the dollar and responding to shifts in U.S. interest rates, which can influence local lending rates and economic activity across sectors.
As the Fed moves to manage economic conditions amid domestic political uncertainties, the UAE’s central bank is likewise balancing the local financial environment to foster stable growth.
