The dirham is linked to the US dollar, hence the UAE has changed its monetary policy in line with the Federal Reserve of the United States. Following the 25 basis point rate cut by the Federal Reserve, the Central Bank of the UAE declared a drop in its overnight deposit facility rate to 4.4 percent, This action emphasizes how in line the UAE is with US monetary policy to keep its financial system and currency stable.

The dirham's pegging to the dollar guarantees that decisions on UAE monetary policy directly follow changes in US interest rates, This system helps the UAE to keep a steady exchange rate, therefore boosting foreign trade and investment and trust in its own economy.

Customers and companies in the United Arab Emirates should benefit from the latest tariff reduction. Lower interest rates, according to analysts, will help consumers to relieve debt as loan and credit borrowing expenses are probably going to drop, For those juggling credit card balances, mortgages, and personal loans, this could offer financial relief and help debt payback to be more reasonable, In the same vein, companies could find it simpler to get money for operational needs and expansion, hence increasing their capacity for economic development.

Moreover, the declining interest rates are expected to boost investment and expenditure, As borrowing becomes more affordable, people might be more likely to make big purchases like cars or houses while companies might fund new projects or equipment, This higher economic activity could help the UAE fulfill more general objectives of economic diversification and development.

Though the rate drop has advantages, it also creates possible problems, Lowering interest rates, for example, may result in decreased returns on savings, which would affect people and organizations depending on interest income. As the range between their borrowing and lending rates closes, banks could also find smaller profit margins.

The way UAE's monetary policy lines up with US Federal Reserve emphasizes how linked the world economy is, Through matching US rate changes, the UAE guarantees that its financial system stays competitive and stable in the global scene. This strategy improves the national economic resilience and helps to keep investor trust.

Because the dirham is pegged to the dollar, the UAE's move to cut its overnight deposit rate to 4.4 percent shows its will to match US monetary policy, This change is supposed to relieve consumer debt, boost consumption, and inspire corporate investments, thereby promoting economic development, Although issues like declining savings returns could develop, the policy seeks to balance sustaining financial stability with encouraging economic growth, The change emphasizes how aggressively the UAE is adjusting its monetary policy to fit the dynamics of world economy.