UAE Central Bank Maintains Interest Rate Amid US Federal Reserve's Decision

UAE Central Bank's Rate Decision

The Central Bank of the United Arab Emirates (CBUAE) has opted to keep its key interest rate steady, mirroring the recent decision made by the United States Federal Reserve. On Wednesday, the bank announced via its social media account that it would maintain the Base Rate for the Overnight Deposit Facility (ODF) at 4.40%.

The #CentralBankUAE has decided to maintain the Base Rate applicable to the Overnight Deposit Facility (ODF) at 4.40%. pic.twitter.com/rUfynF7Yig

— Central Bank of the UAE (@centralbankuae) June 18, 2025

This decision indicates that the base rate for overnight deposits will remain unchanged at 4.40%. This follows the US Federal Reserve's announcement regarding its Interest Rate on Reserve Balances (IORB), which also remained the same.

As reported in a local news outlet, the CBUAE stated that it would keep the interest rate for borrowing short-term liquidity from the bank at 50 basis points above the Base Rate for all standing credit facilities.

Prior to this announcement, analysts had largely anticipated that the Central Bank of the UAE would maintain its rates, as focus now shifts to potential interest rate reductions later in the year.

US Federal Reserve's Stance

In a related development, the US Federal Reserve decided to keep its benchmark interest rates steady at 4.25-4.50% on Thursday morning (IST), reflecting a cautious approach in light of changing economic conditions. Chairman Jerome Powell indicated that this decision was made to support the Fed's objectives of achieving maximum employment and maintaining stable inflation.

"To support our goals, the Federal Open Market Committee has decided to leave our policy interest rate unchanged. We believe that our current monetary policy stance positions us well to respond promptly to any economic developments," Powell stated during the announcement.

The Federal Open Market Committee (FOMC) emphasized that it would continue to evaluate incoming data, the economic outlook, and the associated risks before making any further adjustments to interest rates.