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UAE maintains benchmark interest rate at 3.65% following US Fed decision
The decision follows a similar move by the US Federal Reserve, which continued to hold its key rates
- PUBLISHED: Wed 29 Apr 2026, 10:06 PM UPDATED: Wed 29 Apr 2026, 10:28 PM
The Central Bank of the UAE on Wednesday held its benchmark interest rate at 3.65 per cent. In a statement, the bank said it was maintaining the base rate applicable to the overnight deposit facility at 3.65 per cent.
Consumers in the UAE will continue to enjoy stable mortgage rates, as the UAE on Wednesday held its benchmark interest rate.
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The decision follows a similar move by the US Federal Reserve, which continued to hold its key rates for a third successive month. The UAE follows US monetary policy as the UAE dirham is pegged to the US dollar.
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With the widely expected US move now done, analysts say the Fed will closely watch inflation data, particularly due to pressures arising out of the Iran conflict.
“Fed officials said they will stay flexible and act if needed. Many analysts think the Fed will take a wait-and-see approach for now, as it assesses inflation, the job market, and global risks. Another key question is whether Powell will step down from the Fed’s board after his term as chair ends or stay on as a governor. He is allowed to remain in that role until January 2028. While most Fed chairs leave after their term, some believe Powell should stay to help maintain the Fed’s independence,” said Vijay Valecha, Chief Investment Officer, Century Financial.
For the remaining Fed meetings in 2026, markets are reluctant to price in even a single 25-bps rate cut. This assumes that Kevin Warsh will likely take over as the new Fed chair in May.
A Justice Department decision last week to drop a controversial criminal investigation of the Fed has cleared the way for the confirmation of Kevin Warsh. The geopolitical developments continue to complicate the outlook.
The US-Iran conflict has pushed oil prices sharply higher, raising concerns about renewed inflation pressures while also threatening to slow global growth. US inflation rose to 3.3 per cent in March 2026 from 2.4 per cent in February, driven by a 12.5 per cent increase in energy costs, with petrol up 18.9 per cent and fuel oil rising 44.2 per cent. This has reinforced expectations of delayed rate cuts (tighter policy).
At the same time, a labour market that is finding its footing will likely keep policymakers on the sidelines with this issue, focusing mainly on countering inflation. Federal Reserve officials are likely to treat the energy shock carefully.
On a positive note, economic signals inside the United States are improving. Retail sales soared in March by the most in a year, while job growth rebounded and the unemployment rate unexpectedly fell. “Numbers like that mean the Fed will want to keep its options open,” Valecha said.
“This decision, along with current macros are looking supportive for equities, but investors should exercise caution as this could cap bond rallies,” said Madhur Kakkar, Founder & CEO, Elevate Financial Services.
Associate Editor Somshankar Bandyopadhyay brings more than three decades of experience to the KT newsroom. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.