The Central Bank of the UAE (CBUAE) has increased its Base Rate by 25 basis points, moving from 3.65% to 3.9%, effective Thursday 17 September. The adjustment follows the US Federal Reserve's decision to raise its Interest Rate on Reserve Balances (IORB) by the same margin, the Fed's first rate increase since 2023. The new rate applies to the Overnight Deposit Facility (ODF).
Separately, the CBUAE confirmed it will maintain its short-term liquidity borrowing rate at 50 basis points above the Base Rate across all standing credit facilities.
The UAE's monetary policy framework is structurally anchored to US Federal Reserve movements through the dirham's long-standing peg to the US dollar, meaning the CBUAE's Base Rate functions both as a monetary policy signal and as an effective floor for overnight money market interest rates. The peg arrangement leaves the UAE with limited independent rate-setting discretion when the Fed moves.
Gulf Economist Staff Writer