This decision was taken following the US Federal Reserve Board’s announcement on 28th July 2021, to set the Interest on Reserve Balances (IORB) at 15 basis points, CBUAE said in a statement on Thursday.
The Central Bank 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 signals the general stance of the CBUAE’s monetary policy, shall be anchored to the US Federal Reserve Board’s IORB rate, effective from 29th July 2021. This follows the Federal Reserve’s announcement that, as of 29th July 2021, rates applicable on Interest on Excess Reserves (IOER) and Interest of Requited Reserves (IORR) will be replaced by the single IORB rate.
Previously, the rate applicable to IOER had been the anchor for the CBUAE’s Base Rate.