(MENAFN) The Central Bank of the United Arab Emirates (UAE) has opted to maintain the "base rate" for overnight deposit facilities at its current level of 5.40 percent. This decision follows closely on the heels of the US Federal Reserve's recent announcement, wherein it declared a status quo on the interest rate for reserve balances during its latest meeting held on Wednesday.

Additionally, the UAE Central Bank has decided to uphold the rate applicable to borrowing short-term liquidity from the Central Bank through existing credit facilities, maintaining it at 50 basis points above the base rate. The base rate, intrinsically linked to the interest rate on reserve balances sanctioned by the US Federal Reserve, serves as a pivotal determinant of the overall stance of monetary policy. Furthermore, it establishes a minimum effective interest rate benchmark for overnight money market rates within the UAE.

The decision to maintain the base rate underscores the UAE Central Bank's commitment to stability and continuity in monetary policy amidst global economic dynamics. Given its alignment with the interest rate on reserve balances set by the US Federal Reserve, the UAE's monetary policy framework remains attuned to international developments while also catering to domestic economic conditions.

Meanwhile, the US Federal Reserve's decision to leave interest rates unchanged for the fifth consecutive time reflects a stance of cautiousness and vigilance amid evolving economic circumstances. The benchmark interest rates in the United States, standing at 5.25 and 5.5 percent, represent the highest levels observed in the world's largest economy in approximately 22 years. This consistent approach by the Federal Reserve signals a deliberate effort to balance economic growth with inflationary pressures and potential market volatility.

In summary, the UAE Central Bank's decision to maintain the base rate, coupled with the US Federal Reserve's stance on interest rates, underscores the interconnectedness of global monetary policies. These actions are reflective of a concerted effort to navigate the complex landscape of economic challenges while fostering stability and resilience in both domestic and international financial markets.

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