UAE cuts rate on bank support facilities

01 September 2009

The Central Bank cuts interest rate to help boost economy

The Central Bank of the UAE will reduce the interest rate on its liquidity support facility by 100 basis points to 1.5 per cent from 1 September in a bid to stimulate lending growth.

“This measure would basically reduce the cost of economic activities in the UAE, particularly investment spending, and would contribute to sustained growth and support the national economy in general,” the central bank said in a statement.

The rate cut affects a facility through which banks in the UAE can borrow from the central bank in exchange for depositing assets with the central bank. It is the latest measure introduced in the UAE to try to lower the interbank lending rate and kickstart credit growth, including an announcement in late August that it was changing the way the interbank rate was calculated.

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