The UAE Central Bank has lowered its base rate on overnight deposit facilities by 25 basis points, reducing it from 4.15 percent to 3.90 percent effective Thursday, October 30.
The adjustment aligns with the US Federal Reserve’s decision to trim rates by the same margin on Wednesday — its second rate cut of the year. The UAE typically mirrors US monetary policy due to the dirham’s peg to the US dollar.
Alongside the base rate change, the Central Bank confirmed that borrowing costs for short-term liquidity will remain set at 50 basis points above the new base rate across all standing credit facilities.
The base rate in the UAE is tied to the US Federal Reserve’s Interest Rate on Reserve Balances, serving as a policy benchmark and acting as the lower boundary for overnight money-market rates in the country.
The Fed’s latest move comes amid economic uncertainty in the US, with businesses still adjusting to President Donald Trump’s tariff policies and policymakers navigating prolonged government gridlock. The partial government shutdown has halted most official economic reporting for nearly a month, adding further strain to market sentiment.
While inflation in the US remains above target, Fed officials have signaled concerns about a cooling labor market. Market expectations had already factored in quarter-point cuts in both October and December.
However, analysts said the path ahead remains uncertain. EY chief economist Gregory Daco told AFP before the announcement, “I don’t think it’s a given that there will be a majority of FOMC voters that will favor easing in December.” He added that Federal Reserve chair Jerome Powell “has not made up his mind yet, for one, as to whether a December rate cut will be necessary,” although he expects two quarter-point cuts for the year.
The rate backdrop also unfolds amid widening debate over the Fed’s leadership, as President Trump and Treasury Secretary Scott Bessent have publicly weighed potential changes once Powell’s term as chair ends in May.
