The UAE would maintain a policy of keeping official interest rates at low levels, central bank governor Nasser Al-Suwaidi said. The United Arab Emirates economy, the second largest in the Arab world, may contract this year and the central bank plans to cut interest rates soon to promote growth, he said on Wednesday. “The current financial crisis will reduce the horizons for economic growth in the UAE in 2009 from a growth level of a high single digit to a low growth level or even a contraction,”Al-Suwaidi said in a speech posted on the bank's website on Wednesday. Economic growth is slowing as the global financial crisis affects the property, financial services and tourism industries. Abu Dhabi, the largest emirate within the UAE, pumped money into five of its local banks last month, while neighboring Dubai sold $10bn of bonds to the central bank to raise money. Real estate prices have fallen 25 percent in Dubai from September's peak and 20 percent in Abu Dhabi, Morgan Stanley said in a Feb. 2 report. “The rate will not be zero as is the case in the US. We aim to introduce a low interest rate and maintain it.” The bank on Jan. 19 cut its repurchase rate by half a percentage point to 1 percent following an Oct.8 reduction of the same amount. __
