The UAE Central Bank has decided to keep its base interest rate at 3.65 per cent, aligning its monetary policy with that of the United States Federal Reserve. The decision reflects a cautious approach aimed at maintaining stability in borrowing costs, supporting economic growth, and ensuring predictable financial conditions for businesses, consumers, and investors.
By holding the base rate steady, the Central Bank indicates a commitment to monetary policy continuity amid evolving global and domestic economic conditions. The UAE’s alignment with the US Federal Reserve helps maintain consistency in capital flows, foreign investment, and currency stability, particularly given the UAE dirham’s peg to the US dollar. This synchronization reduces volatility in interest rates for domestic borrowers and helps financial institutions plan and manage lending and deposit operations effectively.
Maintaining the rate also reflects the Central Bank’s assessment of inflationary pressures and economic growth. By keeping borrowing costs unchanged, authorities signal confidence in the current economic trajectory while ensuring that inflation remains under control. The steady rate supports consumer spending, business investment, and credit expansion without introducing excessive financial strain on households or companies.
For businesses, particularly in sectors such as real estate, manufacturing, and finance, the decision provides clarity and predictability in financing costs. Corporate borrowers can plan investments and expansion with reduced uncertainty regarding interest payments, while banks can continue offering loans under stable conditions. Similarly, consumers benefit from predictable mortgage and personal loan rates, contributing to household financial stability.
The move also signals the UAE’s broader commitment to economic resilience and financial stability. By closely monitoring global economic trends and aligning with key international benchmarks, the Central Bank ensures that domestic monetary policy supports both short-term economic activity and long-term fiscal sustainability.
Overall, keeping the base rate at 3.65 per cent highlights a measured and stable approach to monetary policy. By maintaining alignment with the US Federal Reserve, the UAE Central Bank provides stability for borrowers and investors, reinforces confidence in the financial system, and underlines the country’s prudent management of economic and financial conditions in a dynamic global environment.
