UAE holds interest rates steady following US Fed announcement: The Central Bank of the UAE (CBUAE) maintained the base rate for the overnight deposit facility (ODF) unchanged at 5.4% at its meeting last week, WAM reports. The CBUAE also kept interest rates at 50 basis points above the Base Rate. The move follows the US Federal Reserve’s decision on 13 December to maintain the Interest on Reserve Balances (IORB), leaving its key overnight policy rate unchanged at 5.25-5.5%.

Across the pond: US Federal Reserve Chair Jerome Powell said on Wednesday that the US’ tightening cycle is “likely at or near its peak” and that officials are now discussing a reduction in interest rates from their current 22-year high, according to The Financial Times.

Looking forward: The Fed’s announcement to maintain rates was accompanied by its new forecasts, which reveal that a majority of officials expect rates to end 2024 between 4.5%-4.75%. Projections suggest rates will decrease further in 2025, with a majority of officials forecasting they would finish up between 3.5-3.75%.

SOUND SMART- The Base Rate, anchored to the US Fed’s IORB, indicates the overall direction of monetary policy and sets a minimum level for overnight money market interest rates in the UAE.

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