US, UAE rate cuts set to ease borrowing, spur spending

POWELL'S CAUTION TEMPERS OUTLOOK, CHEAPER CREDIT BOOSTS CONFIDENCE IN UAE

- BY JUSTIN VARGHESE

For the second time this year, both the US Federal Reserve and the Central Bank of the UAE (CBUAE) cut key interest rates by 25 basis points.

If you live in the UAE, this matters even if you're not following every move from Washington. Because the dirham is pegged to the US dollar, the CBUAE mirrors the Fed's decisions. That means cheaper borrowing, lower savings returns, and potentially better mortgage rates. But this time, something's different.

Fed Chair Jerome Powell signalled that another rate cut in December isn't guaranteed and that uncertainty is already rippling through global markets, oil prices, and Gulf economies. Here's what has changed, and what UAE residents can expect in the months ahead.

Cheaper loans but don't expect endless cuts

If you already have a variable-rate mortgage or loan, you're likely to see your monthly payments drop slightly in the coming weeks. UAE banks typically adjust their rates in line with the CBUAE base rate.