The Central Bank of the United Arab Emirates has decided to cut the 'base rate' on overnight deposit facilities by 25 basis points, from 3.90% to 3.65%, effective Thursday, December 11. This decision follows the U.S. Federal Reserve's announcement to cut the interest rate on reserve requirements by 25 basis points at its meeting held today. The Central Bank also decided to keep the rate for borrowing short-term liquidity from the Central Bank through all existing credit facilities at 50 basis points above the base rate. The base rate, which is linked to the Federal Reserve's discount rate, sets the general tone of the monetary policy and provides a floor for the effective interest rate on the overnight money market in the country.
