The Central Bank of the UAE (CBUAE) has announced that as of Thursday, December 20, it will raise the interest rates applied to the issuance of its certificates of deposits.

In a statement, the CBUAE said that the increase is in line with an increase in interest rates on the US dollar, following a Federal Reserve Board decision to increase the Federal Funds Rate by 25 basis points.

The Repo Rate applicable to borrowing short-term liquidity from the UAE’s Central Bank against certificates of deposits have also been increased by 25 basis points.

Certificates of deposit, which the Central Bank issues to banks operating in the country, are the monetary policy instrument through which changes in interest rates are transmitted to the banking system.

In late September, a number of Gulf states – including the UAE and Saudi Arabia – raised their interest rates after another hike by the US Federal Reserve.

At the time, the CBUAE announced that it raised both interest rates and the repo rate by 25 basis points.