KHALED AL KHAWALDEH (ABU DHABI)
The US Federal Reserve is expected to deliver a widely anticipated interest rate cut, the first in four years, on Wednesday, with markets expected to react positively to the easing of monetary policy.
Experts say that the rate cut will impact GCC markets positively, creating better conditions for bonds and the financing of new projects.
"Although the gulf markets seem to have already priced in a significant cut for the Fed's decision on Wednesday, even the conservative predictions see big growth opportunities and increase investments in the UAE, particularly in the real estate and tourism sectors," Ranim Turfa, Market Analyst at Axi said.
"A decrease in US interest rates will almost certainly encourage the Central Bank of the UAE to follow the Fed lead and lower local rates. Reducing borrowing costs will significantly stimulate economic growth as lower rates push cash flow into the property and tourism sectors. Simultaneously, lower US rates will also drive global investors to seek opportunities in other markets, such as the UAE, further enhancing economic activity."
A September Reuters analysts poll had the majority of analysts predicting the Federal Reserve lowering interest rates by 25 basis points.
It predicted that with inflation approaching the Fed's two percent target and signs of an economic slowdown on the horizon, policymakers would look at reducing the federal funds rate, which has been held in the 5.25 percent to 5.50 percent range since July 2023.