CBUAE Maintains Base Rate at 3.65% in Sync with US Federal Reserve Decision
DUBAI, UAE – January 28, 2026 – The Central Bank of the UAE (CBUAE) announced it will maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) at 3.65%, tracking the US Federal Reserve’s decision to hold its Interest Rate on Reserve Balances unchanged. The policy supports stability in UAE money markets amid the dirham’s US dollar peg.
Announcement Specifics
CBUAE kept the interest rate for short-term liquidity borrowing at 50 basis points above the Base Rate across all standing credit facilities. The Base Rate anchors monetary policy and sets a floor for overnight interbank rates. This marks the first monetary policy decision of 2026, following a 25 basis point reduction from 3.90% to 3.65% on December 10, 2025.
Official Statement
“The Central Bank of the UAE (CBUAE) has decided to maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) at 3.65%.”
Why it matters: The statement underscores CBUAE’s commitment to a responsive policy framework that ensures alignment with global benchmarks while maintaining domestic financial stability.
Industry Context
The UAE’s fixed exchange rate to the dollar necessitates mirroring Fed actions, fostering predictability for lenders and borrowers across the financial ecosystem. Stable rates at 3.65% ease pressure on loan costs, benefiting fintech lenders operating in Dubai and Abu Dhabi—key MENA financial hubs. While fintech transaction volumes remain undisclosed, the steady funding conditions position the sector for sustained growth.
GCC peers like Saudi Arabia often follow suit with similar rate decisions, promoting regional financial harmony. This stability bolsters investor confidence in the UAE’s economy, which is projected to benefit from ongoing non-oil sector diversification initiatives. The coordinated approach across Gulf central banks creates a favorable environment for cross-border fintech expansion and regional financial integration.
Outlook
CBUAE’s steady stance signals continued vigilance on inflation and growth dynamics. Future decisions will track Fed trajectories, with potential rate easing if US policy softens, which would further aid fintech expansion and economic resilience across the Emirates.
Sources: Zawya, Central Bank of the UAE, CBUAE Press Release, Gulf News, Zawya
