“The base rate remains anchored to the US Federal Reserve, signalling the UAE’s stable monetary policy stance.”
UAE interest rate decision aligns with the US Federal Reserve policy to ensure monetary stability in the UAE
Abu Dhabi, UAE: The Central Bank of the UAE (CBUAE) has announced that the UAE interest rate base is 3.65%, leaving the Overnight Deposit Facility (ODF) rate unchanged. The decision follows the US Federal Reserve’s move to keep the Interest Rate on Reserve Balances (IORB) unchanged, reflecting the UAE’s monetary policy alignment with global benchmarks.
In addition to holding the base rate steady, the CBUAE confirmed that the interest rate for borrowing short-term liquidity from the central bank will remain 50 basis points above the base rate across all standing credit facilities.
The base rate plays a critical role in the UAE’s financial system, as it is anchored to the US Federal Reserve’s IORB and serves as a key indicator of the country’s monetary policy stance. It also establishes an effective floor for overnight money market interest rates, influencing borrowing costs and liquidity conditions across the banking sector.
By maintaining the current rate, the CBUAE aims to ensure financial stability, predictable liquidity conditions and alignment with global monetary trends, particularly given the UAE dirham’s peg to the US dollar. The decision supports consistency in lending and borrowing environments across the UAE’s financial ecosystem.
The move reflects the central bank’s continued commitment to maintaining balanced economic conditions, while closely monitoring international developments and their impact on domestic financial markets.
