The Central Bank of the UAE has kept its Base Rate on the Overnight Deposit Facility unchanged at 3.65%, mirroring the US Federal Reserve's decision to leave the Interest Rate on Reserve Balances untouched.
The move comes as no surprise given the dirham's peg to the US dollar, which ties the UAE's monetary policy closely to decisions made in Washington. Since the Base Rate is anchored to the Fed's IORB, any shift in US policy typically triggers a matching response from the CBUAE.
Alongside the Base Rate, the central bank confirmed that the interest rate for short-term borrowing through its standing credit facilities remains at 50 basis points above the Base Rate. This rate governs how banks access short-term liquidity from the CBUAE when needed.
The Base Rate plays a key role in shaping the broader direction of monetary policy in the UAE. It effectively sets a floor for overnight interest rates in the local money market, influencing borrowing costs across the banking sector.
For businesses and consumers, the decision signals continuity rather than change. With rates holding steady, borrowing costs tied to benchmark rates are unlikely to shift in the near term, offering some predictability for companies managing debt or planning new financing.
The CBUAE's move also reflects a broader pattern seen across Gulf central banks, most of which maintain currency pegs to the dollar and adjust their own rates in lockstep with the Fed. This coordinated approach helps preserve exchange rate stability while limiting policy divergence between the US and the region.
No further changes were announced, and the central bank did not indicate when its next review might take place.
News Source: Emirates News Agency
