UAE Central Bank Maintains Base Rate at 3.65% Following US Fed Decision

Abu Dhabi | EcoPulse24

The Central Bank of the United Arab Emirates has decided to keep the base rate applied to overnight deposit facilities unchanged at 3.65%. This decision reflects the ongoing commitment to monetary stability and the alignment of local policy with global market movements, following the US Federal Reserve’s choice to leave its interest rates unchanged.

The Central Bank clarified that its decision came directly after the US Federal Reserve announced it would maintain the interest rate on reserve balances at its latest meeting, in line with the monetary policy framework adopted in the UAE.

Additionally, the Central Bank decided to keep the rate for short-term liquidity borrowing through all standing credit facilities at 50 basis points above the base rate, maintaining the current interest rate structure in the local money market.

The base rate is a primary reference for the country's monetary policy, as it is linked to the interest rate on reserve balances set by the US Federal Reserve and represents the minimum effective interest rate in overnight interbank money market transactions within the UAE.

EcoPulse24 Analysis:
This rate hold confirms that the UAE’s monetary policy remains on a path of stability and discipline, without adding new funding pressures on the banking sector or the real economy. With US interest rates unchanged, the Central Bank prefers to maintain monetary consistency to ensure liquidity stability and limit fluctuations in borrowing costs. At this stage, the approach prioritizes supporting financial and monetary equilibrium, while awaiting clearer signals from the US Fed regarding the future direction of monetary policy in the coming months.