The Central Bank of the UAE announced a 25-basis-point reduction in its base rate to 4.40% on 18 December 2024, moving in line with the US Federal Reserve's December 2024 rate cut. The new rate took effect from Thursday 19 December 2024.
The CBUAE's Base Rate, which is anchored to the Federal Reserve's interest on reserve balances, is the rate applied to the Overnight Deposit Facility and acts as the primary policy signal for the country's banking system. Because the dirham has been pegged to the US dollar at a fixed rate since 1997, the central bank's rate-setting decisions are structurally constrained by Federal Reserve policy.
REGIONAL MOVES
Saudi Arabia and other dollar-pegged economies in the region made similar moves at the same time.
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