The Central Bank of the UAE (CBUAE) kept its overnight deposit facility base rate unchanged at 3.9% on Wednesday. This decision mirrored the move by the US Federal Reserve, which left the federal funds rate steady in the 3.75%–4.00% range at its October meeting. Given the dirham’s peg to the US dollar, the UAE’s monetary policy remains closely aligned with that of the Fed.
The Base Rate serves as the key indicator of the monetary policy stance and acts as an effective floor for overnight money market rates in the UAE. The CBUAE also decided to keep the interest rate on short-term liquidity borrowing from the central bank at 50 basis points above the Base Rate for all standing credit facilities.
