Central Bank of the UAE raises base rate 25bp to 3.9%
Published · Updated
What happened
The Central Bank of the UAE increased its Base Rate for the Overnight Deposit Facility to 3.90% from 3.65%, effective September 17, after the U.S. Federal Reserve raised its policy rate.
Why it matters
A 25bp policy-rate increase lifts the floor for short-term UAE money-market rates and can pass through to corporate borrowing, consumer loans, and mortgages. It also signals that domestic monetary conditions will continue to track U.S. policy under the dirham's dollar peg, even if local growth conditions differ.
On September 16, 2026, the Central Bank of the UAE said it would raise the Base Rate applicable to the Overnight Deposit Facility by 25 basis points to 3.90%, effective September 17. The move follows the U.S. Federal Reserve's rate increase and reflects the UAE's exchange-rate linkage to the U.S. dollar. The change is an immediate tightening step for dirham liquidity conditions and will feed through to bank funding costs, lending rates, and interest-sensitive sectors.
Watch for
Central Bank of the UAE announcement on September 25 regarding any adjustments to the Base Rate following recent economic indicators UAE banking sector reports on changes in lending rates by September 24 U.S. Federal Reserve statement on interest rate outlook scheduled for September 27 Market reaction analysis from UAE financial institutions on September 26 regarding the impact of the recent rate hike
Sources
- Emir of Kuwait receives UAE President · wam.ae
- News · centralbank.ae
- latest news · wam.ae
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