The Central Bank of the UAE (CBUAE) has announced that it will raise interest rates applied to the issuance of its certificates of deposits as of today.
The move follows the Federal Reserve Board’s decision to increase the Federal Funds Rate by 25 basis points.
Additionally, the CBUAE has raised the repo rate applicable to borrowing short-term liquidity against certificates of deposits have been increased by 25 basis points to 2.25 percent.
Certificates of deposits, which CBUAE issues to banks that operate in the UAE, are the monetary policy instrument through which changes in interest rates are transmitted.
In a separate announcement, the UAE’s state-run WAM news agency reported that 6 to 12 month term deposits rose to AED 190 billion ($51.7 billion) during the first four months of 2018, a 14.9 percent growth from the AED 165.3 billion ($45 billion) reported at the end of 2017.
The statistics show that 6 to 12 month deposits account for about 22.7 percent of total term deposits in UAE banks, which were valued at AED 837.8 billion ($228.1 billion) at the end of April.
April saw the highest performance of this type of deposits, with a total inflow of around AED 16 billion ($4.3 billion) during the month, compared to AED 8.7 billion ($2.3 billion) between January and March.
Three-deposits – which accounted for 56.6 percent of total deposits – were estimated at AED 837.8 billion ($228.1 billion) by the end of April.