The UAE central bank interest rate, the CBUAE Base Rate, is 3.90%, effective 17 September 2026, after the Central Bank raised it by 25 basis points following a US Federal Reserve rise. Because the dirham is pegged to the US dollar, the Base Rate is anchored to the Fed’s Interest on Reserve Balances, and it acts as an effective floor for overnight money market rates in the UAE.
Key takeaways
- The CBUAE Base Rate has been 3.90% since 17 September 2026, after a rise of 25 basis points.
- The Base Rate is anchored to the US Federal Reserve's Interest on Reserve Balances, so UAE policy rates follow Fed decisions.
- The CBUAE cut the Base Rate from 4.40% to 3.65% in three cuts of 25 basis points between September and December 2025, and held it at 3.65% at every decision from January to July 2026.
- DONIA, the overnight rate, stays close to the Base Rate; EIBOR, the benchmark many floating-rate loans use, follows it but can move on its own.
- Banks borrowing overnight from the CBUAE's standing credit facilities pay 50 basis points above the Base Rate.
On this page 9 sections
The current UAE central bank interest rate
The Base Rate is 3.90%. The Central Bank of the UAE (CBUAE) announced the rise on 16 September 2026, the day the US Federal Reserve announced its own, and the new rate applied from the next day.
CBUAE Base Rate
3.90% (from 17 September 2026)
On 16 September 2026 the CBUAE raised its Base Rate, the rate on the Overnight Deposit Facility, by 25 basis points from 3.65% to 3.90%, effective 17 September 2026, after the US Federal Reserve raised its Interest Rate on Reserve Balances (IORB) by 25 basis points; short-term borrowing from the CBUAE stays at 50 basis points above the Base Rate.
- Applies to
- CBUAE monetary policy rate
- Source
- CBUAE Raises the Base Rate by 25 Basis Points (press release, 16 September 2026), Central Bank of the UAE
- Checked
No later change had been announced when this guide was checked against the CBUAE’s press releases on 21 October 2026. The Central Bank announces every change in a press release, so its news page is the place to confirm the rate on a given day. A basis point is one hundredth of a percentage point: 25 basis points is 0.25 percentage points, which took the rate from 3.65% to 3.90%.
What the Base Rate is
The Base Rate is the CBUAE’s official monetary policy rate: the interest the Central Bank pays on its Overnight Deposit Facility, where conventional banks can leave surplus dirhams with it overnight.
Because a conventional bank can always earn the Base Rate by depositing with the Central Bank, it has little reason to lend dirhams overnight to another bank for less. That is why the CBUAE describes the Base Rate as an effective floor for overnight money market rates. Banks that are short of dirhams can do the opposite and borrow overnight from the CBUAE’s standing credit facilities, the Marginal Lending Facility and the Collateralized Murabaha Facility, at a spread above the Base Rate that the Central Bank publishes.
| CBUAE facility | What it does | Rate from 17 September 2026 |
|---|---|---|
| Overnight Deposit Facility | Banks deposit surplus dirhams overnight | Base Rate: 3.90% |
| Standing credit facilities (MLF and CMF) | Eligible banks borrow overnight from the CBUAE | Base Rate plus 0.50%: 3.90% + 0.50% = 4.40% |
Both facilities belong to the Dirham Monetary Framework, which the CBUAE introduced in 2017 to improve how monetary policy is carried out and to develop the UAE’s money markets. The Central Bank also runs open market operations to keep overnight interbank rates in line with the Base Rate, and issues Monetary Bills (M-Bills), short-term securities it sells at auction.
Why UAE rates follow the US Federal Reserve
UAE rates follow the Fed because the dirham is pegged to the US dollar and the CBUAE anchors the Base Rate to the Fed’s Interest on Reserve Balances (IORB), the rate the Fed pays banks on the reserves they hold with it.
Dirham to US dollar peg
USD 1 = AED 3.6725
The UAE dirham is pegged to the US dollar at USD 1 = AED 3.6725; the CBUAE's published USD rate was 3.6725 on its exchange rates page last updated 20 October 2026.
- Applies to
- Official AED/USD exchange rate
- Source
- Exchange Rates (last updated Tuesday 20 October 2026), Central Bank of the UAE
- Checked
With the exchange rate fixed, a bank or an investor choosing between dirhams and dollars compares little more than the interest each pays. If dirham rates sat well below dollar rates, money would leave the dirham for the dollar at the fixed rate, and holding the peg would cost the Central Bank reserves. If dirham rates sat well above, money would flow the other way. Tying the Base Rate to IORB keeps the two close, which is why the CBUAE’s September 2026 decision came on the same day as the Fed’s.
A consequence is that UAE policy rates respond to US economic conditions, which may differ from conditions in the UAE. Why the dirham is pegged in the first place is covered in why the dirham is pegged to the dollar.
USD to AED converter
Convert US dollar amounts into dirhams at the pegged rate.
Recent rate changes
The latest change was a rise of 25 basis points to 3.90% from 17 September 2026. Before that, the CBUAE cut the Base Rate by three quarters of a percentage point in three steps in late 2025, then held it at 3.65% at five decisions in 2026.
Base Rate cuts in 2025
4.40% to 3.65% in three 25 bp cuts (Sep to Dec 2025)
The CBUAE cut the Base Rate applicable to the Overnight Deposit Facility by 25 basis points three times in 2025, each after the US Federal Reserve announced a 25 basis point cut in its Interest Rate on Reserve Balances (IORB): from 4.40% to 4.15% effective 18 September 2025, from 4.15% to 3.90% effective 30 October 2025, and from 3.90% to 3.65% effective 11 December 2025; the rate on all standing credit facilities stayed at 50 basis points above the Base Rate.
- Applies to
- CBUAE Base Rate decisions, 2025
- Source
- CBUAE Lowers the Base Rate by 25 Basis Points (press release, 10 December 2025), Central Bank of the UAE
- Checked
| Effective date | Decision | Base Rate |
|---|---|---|
| Until 17 September 2025 | Level before the 2025 cuts | 4.40% |
| 18 September 2025 | Cut by 25 basis points | 4.15% |
| 30 October 2025 | Cut by 25 basis points | 3.90% |
| 11 December 2025 | Cut by 25 basis points (4.40% minus 3.65% = 0.75 percentage points over the three cuts) | 3.65% |
| January to July 2026 | Held at five decisions, as the Fed kept IORB unchanged | 3.65% |
| 17 September 2026 | Raised by 25 basis points | 3.90% |
Each change was announced in a press release on the day of the Federal Reserve’s decision and took effect the next day. The five 2026 decisions to hold, on 28 January, 18 March, 29 April, 17 June and 29 July, were announced the same way.
EIBOR, DONIA and other market rates
EIBOR and DONIA are the dirham benchmark rates the CBUAE lists alongside the Base Rate. DONIA, which measures what banks actually paid for overnight funding, stays close to the Base Rate; EIBOR, the reference rate many floating-rate loans are priced on, follows it with more room to move.
Base Rate, DONIA and EIBOR
Base Rate, DONIA and EIBOR defined
The Base Rate is the CBUAE's official monetary policy rate, anchored to the US Federal Reserve's Interest on Reserve Balances and an effective floor for overnight money market rates; DONIA is the volume-weighted rate of all one-business-day funding transactions of AED 10 million or more between banks in the UAE, published on UAE business days at 9:30; EIBOR is the daily reference rate at which panel banks can obtain dirham funding for a given tenor before 11:00 UAE time.
- Applies to
- UAE money market benchmark rates
- Source
- Monetary Policy and Domestic Markets (Benchmark Rates and Indices), Central Bank of the UAE
- Checked
EIBOR (Emirates Interbank Offered Rate) is set for several periods, such as one, three and six months. The CBUAE’s Quarterly Economic Review calls 3-month EIBOR a key benchmark for floating-rate loans and derivatives. EIBOR is not fixed to the Base Rate: in the second quarter of 2026, 3-month EIBOR rose on average while the Base Rate stayed at 3.65%. For home loans, see what EIBOR means for a mortgage (thecreditzone.ae).
DONIA (Dirham Overnight Index Average) is calculated from real overnight deals, so it shows how closely the market follows the Base Rate. It averaged 4 basis points below the Base Rate in 2025 and 3 basis points above it in the second quarter of 2026. The CBUAE’s Financial Stability Report links the narrowing of the gap in 2025, compared with 2024, to the introduction of the Overnight Murabaha Facility, which reduced banks’ incentive to place overnight funds in the interbank market at rates below the Base Rate.
What rate changes mean for borrowers, savers and businesses
A Base Rate change reaches companies and households through their banks, and only for products whose rate is linked to a benchmark or is due to be reset. Each bank sets its own lending and deposit rates.
| Product | When a Base Rate change can reach it |
|---|---|
| Loan priced at EIBOR plus a margin | At the next reset date in the contract, for example every three months for 3-month EIBOR |
| Fixed-rate loan | Not during the fixed period; only when it ends |
| Savings accounts | When the bank changes its own rates |
| Fixed-term deposit | When the deposit matures and is renewed |
On a floating-rate loan, the bank’s margin is usually fixed in the contract; only the benchmark part moves. For a business, a rate change shows up in the interest on working capital lines and term loans linked to EIBOR, and in the return on surplus cash. Financing routes for smaller companies are covered in SME finance in the UAE, and dirham government securities sold at auction in treasury bonds and sukuk. Personal borrowing belongs to thecreditzone.ae, including flat and reducing loan rates (thecreditzone.ae).
Worked example
A 25 basis point move on an AED 1,000,000 loan
The loan and deposit amounts are illustrations. The example assumes the full change passes through to the loan and deposit rates, which is not guaranteed, and that the loan balance stays at AED 1,000,000 for the year.
- A business has an AED 1,000,000 loan priced at 3-month EIBOR plus a margin. Suppose 3-month EIBOR rises by 0.25 percentage points after a Base Rate rise.
- Extra interest a year: AED 1,000,000 × 0.25% = AED 2,500.
- The rate resets every three months, so each quarter’s interest rises by AED 2,500 ÷ 4 = AED 625.
- The 2025 cuts worked the other way: 4.40% minus 3.65% = 0.75 percentage points, or AED 1,000,000 × 0.75% = AED 7,500 a year less interest.
- On an AED 500,000 deposit whose rate moves by 0.25 percentage points, yearly interest changes by AED 500,000 × 0.25% = AED 1,250.
A 25 basis point move changes the yearly interest on AED 1,000,000 by AED 2,500.
The CBUAE’s press releases and reviews do not set out a future path for the Base Rate. The next move depends on the US Federal Reserve, and this guide does not forecast it.
How rate decisions are announced
The CBUAE announces each Base Rate decision, including a decision to hold, in a press release on its website on the day of the Federal Reserve’s decision on IORB. The September 2026 release, for example, gave the new rate, the date it took effect and the rate on the standing credit facilities.
Inside the CBUAE, decisions on monetary policy and domestic market operations are governed by the Monetary and Reserve Committee, which is responsible for keeping the UAE’s monetary system sound and stable.
The CBUAE's currency mandate
Currency stability is a statutory objective
Under Article 5 of Federal Decree-Law No. 6 of 2025 Regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business, the CBUAE's objectives are to maintain stability of the national currency within the framework of the monetary system, to contribute to the promotion and protection of the stability of the financial system, and to ensure prudent management of the CBUAE's foreign reserves.
- Applies to
- CBUAE mandate on the dirham
- Source
- Federal Decree-Law No. (6) of 2025 Regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business, Article (5) Principal Objectives and Functions of the Central Bank (CBUAE Rulebook), Central Bank of the UAE
- Checked
Between decisions, the CBUAE reports on interest rates, money supply and bank lending in its Quarterly Economic Review, and on money markets in its Financial Stability Report. Prices are a separate topic, covered in UAE inflation, and output in UAE GDP. More on the wider economy is in the UAE economy guides.
Frequently asked questions
What is the UAE central bank interest rate?
The Central Bank of the UAE's policy rate, called the Base Rate, is 3.90%, effective 17 September 2026. It is the rate on the Central Bank's Overnight Deposit Facility, where conventional banks place surplus dirhams overnight, and it acts as a floor for overnight money market rates in the UAE. Banks that borrow overnight from the Central Bank's standing credit facilities pay 50 basis points more.
Why does the UAE follow the US Fed on interest rates?
The dirham is pegged to the US dollar at USD 1 = AED 3.6725, and the CBUAE anchors its Base Rate to the Fed's Interest on Reserve Balances. With a fixed exchange rate, dirham rates cannot drift far from dollar rates without pushing money into or out of the dirham, so when the Fed changes that rate, the CBUAE announces a matching change.
Did the UAE central bank cut rates in 2025?
Yes. The CBUAE cut the Base Rate three times by 25 basis points, from 4.40% to 3.65%, with effect from 18 September, 30 October and 11 December 2025, each time after the US Federal Reserve cut its Interest on Reserve Balances. It held the rate at 3.65% at every decision from January to July 2026, then raised it by 25 basis points to 3.90% from 17 September 2026.
What is EIBOR?
EIBOR, the Emirates Interbank Offered Rate, is the daily reference rate at which EIBOR panel banks can obtain dirham funding for a given period from the UAE money market before 11:00 UAE time. The Central Bank calls 3-month EIBOR a key benchmark for floating-rate loans and derivatives, so loans priced on it reprice when it moves.
Do bank rates change when the Base Rate changes?
Not automatically. Loans priced at EIBOR or the Base Rate plus a margin usually change at their next reset date, while fixed-rate loans change only when the fixed period ends. Each bank sets its own deposit and lending rates, so how much of a Base Rate move reaches savers and borrowers, and when, depends on the bank and the contract.
Will UAE interest rates go down?
The CBUAE's press releases and reviews do not set out a future path for the Base Rate. Because the rate is anchored to the US Federal Reserve's Interest on Reserve Balances, the next change depends on the Fed's decisions, and the CBUAE announces any move in a press release on its website. This guide does not forecast rates.
Sources
Official and primary sources we used for this page, with the date we last opened each one.
- CBUAE Raises the Base Rate by 25 Basis Points (press release, 16 September 2026)
- CBUAE Maintains the Base Rate at 3.65% (press release, 29 July 2026)
- Monetary Policy and Domestic Markets (Monetary Policy Governance, Domestic Market Operations, Benchmark Rates and Indices; last updated 21 October 2026)
- Dirham Monetary Framework (Framework Pillars; last updated 20 May 2026)
- Quarterly Economic Review, September 2026 (Executive Summary; III.1 Money Supply and Interest Rates)
- Financial Stability Report 2025 (1.1.3 Capital Market Developments)
- Exchange Rates (last updated Tuesday 20 October 2026)
- News and Insights (press releases to 18 October 2026)
- CBUAE Lowers the Base Rate by 25 Basis Points (press release, 10 December 2025)
- Federal Decree-Law No. (6) of 2025 Regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business, Article (5) Principal Objectives and Functions of the Central Bank (CBUAE Rulebook)