ABU DHABI: The Central Bank of the UAE kept the Base Rate applicable to the Overnight Deposit Facility unchanged at 3.65% on April 29, leaving the country’s main policy benchmark at the same level after the latest U.S. rate decision. The move preserves the rate that functions as the floor for overnight money market rates in the UAE and keeps the domestic monetary policy setting steady. The decision also left the framework for day to day liquidity management in place for banks operating in the Emirates.
UAE monetary policy remains steady as CBUAE keeps its benchmark rate unchanged. (AI-generated image)
CBUAE said the rate applicable to borrowing short term liquidity through all existing standing credit facilities would remain 50 basis points above the Base Rate, keeping that level at 4.15%. It said the decision followed the Federal Reserve’s announcement to keep the Interest Rate on Reserve Balances unchanged. The Federal Reserve also maintained the target range for the federal funds rate at 3.50% to 3.75%, leaving U.S. policy settings unchanged at its April meeting.
The UAE central bank’s Base Rate is anchored to the U.S. Federal Reserve’s Interest on Reserve Balances and serves as the prevailing official monetary policy rate in the country. Under the central bank’s framework, the rate provides an effective floor for overnight money market rates and signals the general stance of policy. The Overnight Deposit Facility is used by eligible counterparties to place surplus liquidity with the central bank on an overnight basis within the domestic banking system.
CBUAE keeps liquidity settings intact
The April 29 move extends a run of unchanged settings this year. CBUAE also maintained the same 3.65% Base Rate in January and March, after reducing it by 25 basis points in December 2025. That earlier cut took the rate down from 3.90% and followed a corresponding reduction in the U.S. benchmark used to anchor the UAE rate framework. Since then, the central bank has left the Base Rate unchanged across successive policy announcements.
By keeping the rate on the Overnight Deposit Facility steady and holding standing credit facilities at a fixed margin above it, the UAE central bank left its operating corridor unchanged. That means the price of overnight surplus placements at the central bank and the cost of short term liquidity borrowing under existing facilities remain at previously announced levels. For lenders and market participants, the announcement confirmed continuity in the interest rate structure governing the domestic overnight money market.
Federal Reserve hold sets backdrop
The Federal Reserve’s decision on April 29 kept U.S. policy settings unchanged, and the UAE announcement followed that outcome the same day. Because the Base Rate in the Emirates is tied to the U.S. Interest on Reserve Balances, changes or holds in U.S. settings are reflected in the UAE policy rate framework. In this case, the unchanged U.S. decision meant no adjustment to the benchmark applied to the UAE’s Overnight Deposit Facility or its related standing facilities.
The latest decision leaves the UAE’s Base Rate at 3.65% and the standing credit facility rate at 4.15%, maintaining the structure that governs overnight liquidity conditions in the banking system. The announcement did not alter the central bank’s existing operating framework for surplus deposits or short term liquidity borrowing, and it kept the benchmark at the level introduced after the December 2025 reduction. The decision preserves the current rate corridor for the UAE financial system. – By Content Syndication Services.