Dubai, UAE — January 2026 — The US Federal Reserve held its benchmark interest rate steady on Wednesday, maintaining the target range between 3.5 percent and 3.75 percent.
The decision aligned with market expectations, with ten officials voting in favor of the pause. However, the move was not unanimous, as two governors dissented in favor of an immediate rate cut.
In its statement, the Fed cited persistently high inflation and continued strong economic growth as key factors behind holding rates. The central bank offered no new guidance on the potential timeline for future monetary easing, noting only that the unemployment rate has shown signs of stabilization while job gains have remained modest.
Following the Fed’s announcement, several Gulf central banks moved to adjust their own monetary policy settings. The Central Bank of the UAE announced it would maintain its Base Rate, which is anchored to the US Fed’s policy, at 3.65 percent.
Similarly, the Central Bank of Bahrain kept its key overnight deposit rate unchanged at 4.25 percent, stating the decision aimed to preserve monetary and financial stability.
In a contrasting move, the Central Bank of Qatar opted to cut its main interest rates by 25 basis points. The Qatari central bank reduced its deposit rate to 3.85 percent, its repo rate to 4.10 percent, and its lending rate to 4.35 percent, directly citing the US Fed’s decision to pause as the reason for its own easing.
