The Central Bank of the UAE (CBUAE) has cut interest rates, following US Federal Reserve cuts to mitigate the economic impact of Coronavirus (COVID-19)
Effective from yesterday (March 16), the bank has decided to 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.
The bank had, earlier this month, lowered interest rates to 50 basis points, in line with the decrease in interest rates on the US dollar, following the U.S. Federal Reserve’s move to cut its rate.
The Repo Rate, which applies to the borrowing short-term liquidity from CBUAE against CDs, will be maintained at 50 basis points above the 1-week CD rate.
The bank has also reduced rates of 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.
The Emirate’s Central Bank released an AED 100 billion economic relief package for retail and corporate customers affected by COVID-19 last week. The Targeted Economic Support Scheme consists of AED50 billion from the CBUAE funds through collateralised loans at zero cost to all banks operating in the UAE and of AED 50 billion funds freed up from banks’ capital buffers.
Following CBUAE’s announcement, Abu Dhabi also announced a slew of stimulus packages under Ghadan 21.
