The UAE Central Bank, which follows US monetary policy as the dirham is pegged to the US dollar, is likely to keep its interest rate unchanged at 1.5 per cent for the rest of the year as inflation remains tepid, analysts at BMI Research said.
The analysts believe the Central Bank will maintain a slight premium to the US Fed fund rate, which stands at between 1 per cent and 1.25 per cent, through to at least 2021. In line with forecasts of US Federal Reserve hikes over the next two years, BMI said that the UAE was likely to boost interest rates by 100 basis points in 2018 and 2019.
"Inflation in the UAE has remained steady despite subsidy cuts, removing any inclination to hike and the peg of the Emirati dirham to the US dollar will mean that the Central Bank of the UAE will seek to maintain the interest rate deferential, even as growth remains lacklustre," BMI Research said.
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UAE Central Bank raises rates in line with US Federal Reserve
Mixed reaction across the UAE economy to US Federal Reserve rate hike
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The UAE economy has been treading water in the past couple of years, weighed down by a drop in consumer confidence and business expansion. The economy grew 3 per cent in 2016, slowing from 3.8 per cent the previous year, following a lull in non-oil economic growth, according to the Federal Competitiveness and Statistics Authority. Many economists expect growth this year will be muted with many, including the Egyptian investment bank EFG-Hermes, forecasting that GDP will not rise by much more than 1 per cent before rebounding next year.
The UAE Central Bank last raised rates in March when it increased the interest on its certificates of deposit, its main monetary policy transmission tool, by 25 basis points.
That comes at a time when the fortunes of the US and the UAE economy are taking divergent paths. While the US economy is recovering from the financial crisis of 2008, allowing the Fed to start raising rates, the UAE economy has slowed down since 2014 when the price of oil crashed. If oil prices remain low and interest rates rise, that could add increased pressure to the local economy, economists say.
To counter the drop in revenues from oil, regional governments are introducing new forms of taxation, reducing subsidies and selling off stakes in government companies to help to bolster budgets. Last week, the UAE's introduction of a 5 per cent value added tax that will start in January 2018 was approved and it is likely to have an inflationary impact on the economy.
"There are a host of exemptions to this for essentials such as food items but given the importance of the retail sector in the UAE it will drive up price growth once implemented," the BMI report said. "That said, hiking rates in line with the US will help contain these pressures, and we forecast that inflation will average 2.8 per cent next year."
UAE currency: the story behind the money in your pockets
The specs
Engine: 8.0-litre, quad-turbo 16-cylinder
Transmission: 7-speed auto
0-100kmh 2.3 seconds
0-200kmh 5.5 seconds
0-300kmh 11.6 seconds
Power: 1500hp
Torque: 1600Nm
Price: Dh13,400,000
On sale: now
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Killing of Qassem Suleimani
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
T20 World Cup Qualifier A, Muscat
Friday, February 18: 10am - Oman v Nepal, Canada v Philippines; 2pm - Ireland v UAE, Germany v Bahrain
Saturday, February 19: 10am - Oman v Canada, Nepal v Philippines; 2pm - UAE v Germany, Ireland v Bahrain
Monday, February 21: 10am - Ireland v Germany, UAE v Bahrain; 2pm - Nepal v Canada, Oman v Philippines
Tuesday, February 22: 2pm – semi-finals
Thursday, February 24: 2pm – final
UAE squad: Ahmed Raza (captain), Muhammad Waseem, Chirag Suri, Vriitya Aravind, Rohan Mustafa, Kashif Daud, Zahoor Khan, Alishan Sharafu, Raja Akifullah, Karthik Meiyappan, Junaid Siddique, Basil Hameed, Zafar Farid, Mohammed Boota, Mohammed Usman, Rahul Bhatia
All matches to be streamed live on icc.tv
'Laal Kaptaan'
Director: Navdeep Singh
Stars: Saif Ali Khan, Manav Vij, Deepak Dobriyal, Zoya Hussain
Rating: 2/5
What is dialysis?
Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.
It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.
There are two kinds of dialysis — haemodialysis and peritoneal.
In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.
In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.
It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
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- Financial well-being incentives
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1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
