It benefits all borrowers

"Central": Interest rates will continue to decline until 2023

The Central Bank of the United Arab Emirates expects that the main interest rates will remain low for long periods of time that may reach 2023, coinciding with the actions of the US Federal Reserve, due to the policy of pegging to the dollar.

"Low interest rates in the United States for long periods of time will lead to low interest rates in the UAE, in line with the arrangement of the fixed exchange rate system of the dirham against the dollar," the Central Bank said in its latest report.

This will benefit all borrowers.

At the same time, the dollar, and thus the dirham, may decline against higher interest-rate currencies, which enhances the price competitiveness of the UAE's non-hydrocarbon exports, which have witnessed a boom recently, despite the global economic slowdown.

He added, "The (Federal Reserve) is expected to maintain its primary interest rate, which is the overnight federal funds rate, for a longer period than it was in the previous framework to allow higher future inflation."

The "Federal Reserve" also indicated to keep its main interest rate within the current range, which is (0) to 0.25% until at least 2023.

In its report, the Central Bank confirmed that most banking indicators witnessed an improvement during the third quarter of 2020, with the support of the enhanced targeted economic support program, which was adopted by the Central Bank for the benefit of banks.

Deposits increased on an annual basis by 5.8% due to the increase in deposits of the government and associated entities.

Meanwhile, credit increased by 4.9% supported by good financial health indicators.

Finally, interest rates in the interbank market continued to decline in the third quarter due to global monetary easing. The difference between the EIBOR and the LIBOR on the dollar also decreased.

• Most banking indicators improved during the third quarter of 2020, with the support of the economic support program.

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