Dubai - The Central Bank of the UAE (CBUAE) has kept its base interest rate unchanged at 4.40%, following the U.S. Federal Reserve’s decision to hold the Interest Rate on Reserve Balances (IORB) steady.
The base rate, which applies to the Overnight Deposit Facility (ODF), remains aligned with the Fed’s policy stance, as the UAE dirham is pegged to the U.S. dollar. The CBUAE also confirmed that borrowing short-term liquidity from the central bank will continue to carry a rate 50 basis points above the base rate.
The decision was expected, with global markets closely watching for signals on potential rate cuts later this year. Both the Fed and the CBUAE opted to stay the course as inflation concerns persist and economic indicators remain mixed.
The UAE base rate serves as the floor for overnight interest rates in the domestic money market and is a key tool for guiding monetary policy in the country.
By mirroring the Fed’s rate move, the CBUAE continues its strategy of maintaining currency stability and investor confidence, while supporting gradual economic growth.
Analysts say future adjustments will depend on global inflation trends and the pace of monetary easing in major economies.
The CBUAE’s decision ensures that borrowing costs across the UAE banking system remain stable in the near term.
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