Abu Dhabi, UAE – In a major monetary policy update, the Central Bank of the UAE (CBUAE) has cut its base interest rate by 25 basis points, bringing it down from 4.40% to 4.15%, effective immediately. This follows a similar move by the U.S. Federal Reserve, as the dirham remains pegged to the U.S. dollar.
The cut marks the first interest rate reduction of 2025 and is aimed at easing borrowing conditions, supporting economic activity, and boosting investor confidence across key non-oil sectors like real estate, trade, and tourism.
“Lower interest rates will help reduce the cost of borrowing, which is a positive development for both households and SMEs,” said Ali Al Qubaisi, a senior economist based in Dubai. “However, it also means that savers will see reduced returns.”
📊 Implications Across Sectors
- Mortgages & Loans: Homebuyers and businesses are expected to benefit from lower lending rates, making financing more affordable.
- Savings Accounts: Banks may offer lower returns on deposits, prompting investors to explore alternatives such as real estate or equities.
- Real Estate: Industry insiders say the move could trigger renewed demand in residential and commercial property markets.
- Stock Market: Lower rates typically attract more liquidity into equity markets, potentially boosting trading volumes.
The Central Bank emphasized that the move is part of its broader strategy to maintain monetary and financial stability while supporting sustainable economic growth.
This policy shift comes at a time when the UAE continues to diversify its economy and attract foreign investment, amid global uncertainty and shifting oil prices.
