The UAE Central Bank left its base rate on the overnight deposit facility unchanged at 3.90 per cent on Wednesday, October 28, mirroring the US Federal Reserve's decision taken the same day. The move was widely expected, since the UAE typically aligns its interest-rate policy with the Fed to preserve the dirham's peg to the US dollar.
The Federal Reserve said it was holding its benchmark rate steady as well, cautioning that the fight against inflation was not yet over. That cautious stance from Washington was echoed in Abu Dhabi's decision to stay the course rather than adjust borrowing costs.
Economists say the hold points to relative stability in financing costs for businesses and consumers across the UAE in the near term. Lending and deposit rates at local banks are expected to remain broadly unchanged over the coming weeks as a result.
The decision comes as regional financial markets continue to navigate geopolitical uncertainty and swings in oil prices. Analysts note that a steady rate policy can help keep the UAE attractive to foreign investors during a period of wider volatility.
Markets will now watch closely for the Fed's next moves, since any shift in US monetary policy feeds directly into the UAE and other Gulf economies whose currencies are pegged to the dollar.