The Central Bank of the United Arab Emirates (UAE) decided on Wednesday to keep its key interest rate unchanged. This followed the decision by the US Federal Reserve to maintain rates at their previous level, thereby supporting the alignment of the country's monetary policy with the dollar to which the dirham is pegged.
The Central Bank's base rate, which applies to the Overnight Deposit Facility (ODF), remained at 3.90 percent. This move was widely anticipated, as the UAE typically follows changes in the Federal Reserve's policy to ensure currency stability.
The base rate, which is linked to the Fed's Interest on Reserve Balances (IORB) rate, serves as the main signal of monetary policy and sets the lower limit for interbank market rates in the UAE. This decision implies that borrowing costs for businesses and consumers are likely not to change in the near future, and bank lending and deposit rates will remain relatively stable.