UAE Central Bank raises base rate to 3.9% effective September 17

The Central Bank of the UAE increased the base rate to 3.9 percent on September 16, 2026, effective September 17, a rise of 25 basis points from the previous 3.65 percent level. The rate applies to the Overnight Deposit Facility, according to the CBUAE announcement. The decision followed the US Federal Reserve's increase of the federal funds target range by 25 basis points to 3.75–4.00 percent on the same date.

UAE base rate framework and standing facilities#

The CBUAE set the rate for short-term liquidity borrowed through standing credit facilities at 50 basis points above the base rate across all such facilities. The base rate is anchored to the Federal Reserve's Interest Rate on Reserve Balances and signals the general stance of monetary policy in the UAE. It provides an effective floor for overnight money market interest rates in the country.

Federal Reserve decision and vote#

The Federal Reserve moved its benchmark target range upward from 3.50–3.75 percent, bringing it to 3.75–4.00 percent on September 16, 2026. The Federal Open Market Committee decision was unanimous and marked the first US rate increase since July 2023, following five consecutive meetings in 2026 at which rates remained unchanged. At the Fed's July 2026 meeting, rates were held unchanged in a 9–3 vote, according to Economy Middle East reporting.

US inflation data and energy prices#

The US Consumer Price Index rose 0.4 percent from July to August 2026, up from a 0.1 percent monthly gain in July, with the annual rate holding at 3.4 percent, the US Bureau of Labor Statistics reported. Core inflation, which excludes food and energy, increased 0.3 percent during August and 2.4 percent over the year. The energy index climbed 16.3 percent year over year in August, with gasoline prices 27.4 percent higher and fuel oil up 52 percent. Gasoline increased 3.9 percent in August, representing over one-third of the monthly rise in headline consumer prices.

Federal Reserve projections through 2027#

The median projections from Fed policymakers indicate a potential further 25-basis-point increase during 2026, bringing the target range to 4.00–4.25 percent. Rates could hold near that level through 2027 before declining, according to the median outlook. A Reuters poll conducted before the September meeting found that 86 out of 101 surveyed economists anticipated a 25-basis-point rate increase by the Fed. The Fed's preferred Personal Consumption Expenditures inflation measure remained around 3.7 percent ahead of the September decision, according to Reuters reporting.