The Central Bank of the UAE raised its base rate by 25 basis points, from 3.65 per cent to 3.9 per cent, effective Thursday, September 17, 2026. The decision followed a similar interest rate increase by the US Federal Reserve.

The UAE base rate is linked to the Federal Reserve’s policy rate because the dirham is pegged to the US dollar. As a result, changes in US monetary policy typically affect UAE rates in the same direction. The Federal Reserve raised its target rate by 25 basis points to a range of 3.75 per cent to 4 per cent.

For fixed-rate mortgage holders, the latest increase does not necessarily mean an immediate rise in monthly repayments. The agreed rate generally remains unchanged until the fixed-rate period ends. However, variable-rate mortgages may be recalculated at a higher rate during the bank’s next review, resulting in increased repayments.

People applying for new home, car or personal loans may also face higher borrowing costs. However, a 0.25 percentage-point increase in the base rate does not mean every bank will raise its product rates by the same amount. Final pricing depends on the bank, loan amount, repayment term and the customer’s credit profile.

For credit cards, a higher base rate does not necessarily lead to an immediate increase in rates across all products, as fees and interest rates are determined by the terms of each banking product. Nevertheless, a higher interest-rate environment can increase the overall cost of using credit.

Savers, by contrast, may benefit from the change, as some banks could raise returns on savings accounts or fixed-term deposits. However, whether the increase is passed on to customers depends on each bank’s policy and may apply only to certain deposit amounts or terms.

Overall, the impact of the decision on each individual will depend on the terms of their existing agreement. Whether the rate is fixed or variable, the timing of any loan review and the bank’s terms will determine the extent of any change in actual costs.