Former US President Donald Trump has again demanded an immediate interest rate cut from the Federal Reserve, triggering global intrigue on the possible timeline for the next action. As Trump’s request is digested by markets, experts are closely observing to determine if the Fed makes an earlier-than-anticipated shift — something that would change global patterns of lending, even in the UAE.
If the U.S. central bank cuts rates earlier, the impact would be felt throughout international financial markets. Dollar-pegged currencies like the UAE dirham, held by emerging economies like those in the Gulf, would likely experience a reduction in borrowing costs simultaneously, affecting home mortgages, credit card charges, and business lending.
UAE financial experts say that this would provide a much-needed relief for investors and borrowers. “If the U.S. lowers interest rates, UAE lenders generally follow suit in order to keep pace with parity and competitiveness,” a senior economist at an investment company based in Dubai said. Reduced rates would also stimulate property investments as well as corporate borrowing.
But the timing is anybody’s guess. The Federal Reserve has so far played it safe, walking the tightrope between inflation and economic buffers. Trump’s political bargaining may fail to influence the Fed directly, but it assuredly puts a degree of urgency and focus on the global interest rate debate.
