UAE Central Bank Cuts Base Rate to 3.90% After Fed’s Move

The Central Bank of the UAE (CBUAE) has reduced the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25 basis points — from 4.15% to 3.90%, effective Thursday, October 30.

The move comes right after the US Federal Reserve announced a similar 25-basis-point cut in the Interest Rate on Reserve Balances (IORB). Since the UAE dirham is pegged to the US dollar, the CBUAE often adjusts its monetary policy in line with the Fed’s actions to maintain currency stability and ensure balanced market conditions.

According to the CBUAE, the interest rate for borrowing short-term liquidity through all standing credit facilities will remain at 50 basis points above the new Base Rate. This means banks can still access short-term funds at predictable and stable rates, helping maintain smooth liquidity in the financial system.

The Base Rate serves as a key benchmark for overnight money market interest rates in the UAE and reflects the overall stance of the country’s monetary policy. By lowering it, the Central Bank aims to keep borrowing conditions supportive while ensuring that inflation and financial stability remain under control.

The rate adjustment highlights the UAE’s continued coordination with global monetary trends while reinforcing confidence in its strong and adaptive financial framework.