Most central banks in the Gulf region cut their benchmark interest rates on Thursday, joining the US Federal Reserve in reducing the rate for the first time in four years.
After hitting the pause on increasing interest rates since July last year, the Fed cut US interest rates by 50 basis points to the 4.75 per cent to 5 per cent range on Wednesday, at the end of its two-day Federal Open Market Committee (FOMC) meeting.
With the much-anticipated cut in the benchmark interest rates, the US has entered a monetary policy easing cycle as the Fed tries to stave off a recession and achieve a soft landing for the world’s biggest economy. The Fed kept the rates at the highest level in 23 years for more than a year to combat inflation, but the move also cooled economic growth.
“Over the past two years, the labour market has cooled from its formerly overheated state. Inflation is eased substantially,” Fed chairman Jerome Powell said on Wednesday. “This recalibration of our policies will help maintain the strength of the labour market.” It would also help further progress on inflation as the Fed begins to move towards a more neutral stance, he added.
- The Saudi Central Bank, better known as Sama, on Thursday matched the Fed rate cut, reducing its repurchase agreement (repo) rate by half a percentage point to 5.5 per cent and its reverse repo rate by a similar margin to 5 per cent.
- The UAE Central Bank reduced its base rate for the overnight deposit facility by 50 basis points to 4.90 per cent, effective from Thursday. It maintained the interest rate applicable to borrowing short-term liquidity from the regulator at 50 basis points above the base rate for all standing credit facilities, the regulator said on Wednesday. The base rate, which is anchored to the Fed's interest on reserve balances (IORB), signals the general stance of the Central Bank's monetary policy and provides an effective interest rate floor for overnight money market rates.
- The Central Bank of Bahrain cut its key rate on overnight deposits by 50 basis points point to 5.5 per cent.
- The banking regulator in Kuwait also dropped its key policy rate, the discount rate, by 25 bps to 4 per cent.
- The Central Bank of Qatar raised its repo rate by a 55 basis points to 5.45 per cent. It also reduced its deposit rate to 5.2 per cent, and the lending rate to 5.7 per cent.
Most central banks in the Gulf follow the Fed's policy rate moves due to their currencies being pegged to the US dollar, with Kuwait the only exception in the six-member economic bloc as its dinar is linked to a basket of currencies. They remained in lockstep with the Fed in its aggressive rate increase cycle despite far lower inflation in the oil-rich economies.
The Fed's bigger cut shows that it is keen to urgently tackle concerns about economic growth.
“The choice to reduce rates by 50 basis points – as opposed to a more tentative 25 bps cut – shows the FOMC are taking an aggressive approach to stimulating growth and propping up the jobs market,” said Mahmoud Alkudsi, senior market analyst at Abu Dhabi-based international securities brokerage ADSS.
“While interest rate cuts were largely priced in by markets, cuts of this extent come as somewhat of a surprise. The lower central rates will likely dampen an already sluggish US dollar in the short term.”
Oil prices, rather than monetary policy, drive spending policies of sovereigns in the region that is home to one third of the world's proven reserves. Countries including Saudi Arabia, the world's biggest oil exporter, and the UAE, the second-largest Arab economy, are undertaking tens of billions of dollars worth of projects to diversify their economies.
Most are part financed by government equity as well as commercial financing facilities and project bonds, and the lower cost will be a welcome relief.
Economic impact
The lower interest rate regime will likely spur economic momentum in the Gulf economies that have maintained strong growth since the pandemic despite global headwinds and geopolitical turmoil, analysts said.
Emirates NBD, the biggest bank in Dubai, said it is “leaving its growth targets unchanged” at this time, given the anticipated benefits for the Gulf region in the wake of the monetary easing-driven assistance to regional economies.
The UAE economy, which has maintained a strong growth streak since 2022, grew by 3.4 per cent in the first quarter of this year. The country’s real gross domestic product reached Dh430 billion ($117 billion) during the January to March period, the Ministry of Economy said earlier this month, citing preliminary estimates from the Federal Competitiveness and Statistics Centre.
A 4 per cent year-on-year rise during the quarter in the non-oil sector of the Arab world's second-largest economy drove growth as the Emirates continued its economic diversification strategy.
Business activity in the UAE's non-oil private sector also maintained growth momentum in August. The seasonally adjusted S&P Global purchasing managers’ index reading increased to 54.2 in August, from 53.7 in July, well above the neutral 50 mark that separates economic growth from contraction.
The UAE's economy rose by 3.6 per cent last year, driven by a 6.2 per cent boost from the non-oil sector. It is projected to grow by 3.9 per cent this year and accelerate to 6.2 per cent expansion next year, with oil production forecast to increase significantly as Opec eases cuts, while the non-oil sector continues to grow, the Central Bank said.
“With the interest rates down, we might see an increase in credit growth, which will be positive for banks and rate sensitive sectors,” Faisal Hasan, chief investment officer and head of asset management at Al Mal Capital, said. “Also, from the investment point of view, dividend yielding asset will catch investor attention.”
The inflation dynamic
The UAE Central Bank projects inflation in the country to rise to 2.3 per cent, compared to 1.6 per cent last year, due to a moderate increase in commodity prices, wages and rents. It also expects consumer prices to average a 2.3 per cent rise next year.
Inflation in Saudi Arabia has also remained relatively low over the past two years. Annual inflation is projected to fall to 1.9 per cent by the end of this year, compared with 2.3 per cent last year, S&P Global Ratings said earlier this month.
“Lower interest rates will be a tailwind to non-oil economies across the region where many have a much lower inflation profile than the US,” Edward Bell, head of market economics at Emirates NBD, said.
Global inflation is forecast to decline steadily, to 5.9 per cent in 2024 and 4.5 per cent in 2025, after hitting 6.8 per cent last year, according to estimates by the International Monetary Fund.
Inflation in the US has come down to 2.4 per cent in August, close to the 2 per cent desired level of the Fed, which had started the rates increase cycle in March 2022 to combat prices that hit a four-decade high of 9.1 per cent in June 2022.
The high interest rate environment aimed at cooling both inflation and job growth has stoked fears of a recession. JP Morgan Chase, the biggest US lender, in August, raised the probability of a US and global recession materialising before end-2024 to 35 per cent. It kept the probability of a recession happening by the end of next year unchanged at 45 per cent.
Sheikh Zayed's poem
When it is unveiled at Abu Dhabi Art, the Standing Tall exhibition will appear as an interplay of poetry and art. The 100 scarves are 100 fragments surrounding five, figurative, female sculptures, and both sculptures and scarves are hand-embroidered by a group of refugee women artisans, who used the Palestinian cross-stitch embroidery art of tatreez. Fragments of Sheikh Zayed’s poem Your Love is Ruling My Heart, written in Arabic as a love poem to his nation, are embroidered onto both the sculptures and the scarves. Here is the English translation.
Your love is ruling over my heart
Your love is ruling over my heart, even a mountain can’t bear all of it
Woe for my heart of such a love, if it befell it and made it its home
You came on me like a gleaming sun, you are the cure for my soul of its sickness
Be lenient on me, oh tender one, and have mercy on who because of you is in ruins
You are like the Ajeed Al-reem [leader of the gazelle herd] for my country, the source of all of its knowledge
You waddle even when you stand still, with feet white like the blooming of the dates of the palm
Oh, who wishes to deprive me of sleep, the night has ended and I still have not seen you
You are the cure for my sickness and my support, you dried my throat up let me go and damp it
Help me, oh children of mine, for in his love my life will pass me by.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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COMPANY%20PROFILE
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Voices: How A Great Singer Can Change Your Life
Nick Coleman
Jonathan Cape
RESULTS
2pm: Handicap (PA) Dh40,000 (Dirt) 1,200m
Winner: Najem Al Rwasi, Fabrice Veron (jockey), Ahmed Al Shemaili (trainer)
2.30pm: Handicap (PA) Dh40,000 (D) 2,000m
Winner: Fandim, Fernando Jara, Majed Al Jahouri
3pm: Maiden (PA) Dh40,000 (D) 1,700m
Winner: Harbh, Pat Cosgrave, Ahmed Al Mehairbi
3.30pm: Maiden (PA) Dh40,000 (D) 1,700m
Winner: Wakeel W’Rsan, Richard Mullen, Jaci Wickham
4pm: Crown Prince of Sharjah Cup Prestige (PA) Dh200,000 (D) 1,200m
Winner: Jawaal, Fernando Jara, Majed Al Jahouri
4.30pm: Sheikh Ahmed bin Rashid Al Maktoum Cup (TB) Dh200,000 (D) 2,000m
Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer
COMPANY%20PROFILE
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ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
UAE currency: the story behind the money in your pockets
The specS: 2018 Toyota Camry
Price: base / as tested: Dh91,000 / Dh114,000
Engine: 3.5-litre V6
Gearbox: Eight-speed automatic
Power: 298hp @ 6,600rpm
Torque: 356Nm @ 4,700rpm
Fuel economy, combined: 7.0L / 100km
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
Mohammed bin Zayed Majlis
Challenge Cup result:
1. UAE 3 faults
2. Ireland 9 faults
3. Brazil 11 faults
4. Spain 15 faults
5. Great Britain 17 faults
6. New Zealand 20 faults
7. Italy 26 faults
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
LA LIGA FIXTURES
Friday Athletic Bilbao v Celta Vigo (Kick-off midnight UAE)
Saturday Levante v Getafe (5pm), Sevilla v Real Madrid (7.15pm), Atletico Madrid v Real Valladolid (9.30pm), Cadiz v Barcelona (midnight)
Sunday Granada v Huesca (5pm), Osasuna v Real Betis (7.15pm), Villarreal v Elche (9.30pm), Alaves v Real Sociedad (midnight)
Monday Eibar v Valencia (midnight)
Look north
BBC business reporters, like a new raft of government officials, are being removed from the national and international hub of London and surely the quality of their work must suffer.
More from Neighbourhood Watch:
The%20specs
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Killing of Qassem Suleimani
Global state-owned investor ranking by size
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
Leaderboard
63 - Mike Lorenzo-Vera (FRA)
64 - Rory McIlroy (NIR)
66 - Jon Rahm (ESP)
67 - Tom Lewis (ENG), Tommy Fleetwood (ENG)
68 - Rafael Cabrera-Bello (ESP), Marcus Kinhult (SWE)
69 - Justin Rose (ENG), Thomas Detry (BEL), Francesco Molinari (ITA), Danny Willett (ENG), Li Haotong (CHN), Matthias Schwab (AUT)
Company%C2%A0profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EHayvn%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2018%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EChristopher%20Flinos%2C%20Ahmed%20Ismail%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EAbu%20Dhabi%2C%20UAE%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3Efinancial%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%20%3C%2Fstrong%3Eundisclosed%3Cbr%3E%3Cstrong%3ESize%3A%3C%2Fstrong%3E%2044%20employees%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3Eseries%20B%20in%20the%20second%20half%20of%202023%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EHilbert%20Capital%2C%20Red%20Acre%20Ventures%3C%2Fp%3E%0A
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
RESULTS
Catchweight 63.5kg: Shakriyor Juraev (UZB) beat Bahez Khoshnaw (IRQ). Round 3 TKO (body kick)
Lightweight: Nart Abida (JOR) beat Moussa Salih (MAR). Round 1 by rear naked choke
Catchweight 79kg: Laid Zerhouni (ALG) beat Ahmed Saeb (IRQ). Round 1 TKO (punches)
Catchweight 58kg: Omar Al Hussaini (UAE) beat Mohamed Sahabdeen (SLA) Round 1 rear naked choke
Flyweight: Lina Fayyad (JOR) beat Sophia Haddouche (ALG) Round 2 TKO (ground and pound)
Catchweight 80kg: Badreddine Diani (MAR) beat Sofiane Aïssaoui (ALG) Round 2 TKO
Flyweight: Sabriye Sengul (TUR) beat Mona Ftouhi (TUN). Unanimous decision
Middleweight: Kher Khalifa Eshoushan (LIB) beat Essa Basem (JOR). Round 1 rear naked choke
Heavyweight: Mohamed Jumaa (SUD) beat Hassen Rahat (MAR). Round 1 TKO (ground and pound)
Lightweight: Abdullah Mohammad Ali Musalim (UAE beat Omar Emad (EGY). Round 1 triangle choke
Catchweight 62kg: Ali Taleb (IRQ) beat Mohamed El Mesbahi (MAR). Round 2 KO
Catchweight 88kg: Mohamad Osseili (LEB) beat Samir Zaidi (COM). Unanimous decision
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
What is dialysis?
Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.
It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.
There are two kinds of dialysis — haemodialysis and peritoneal.
In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.
In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.
It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.
more from Janine di Giovanni
FIXTURES (all times UAE)
Sunday
Brescia v Lazio (3.30pm)
SPAL v Verona (6pm)
Genoa v Sassuolo (9pm)
AS Roma v Torino (11.45pm)
Monday
Bologna v Fiorentina (3.30pm)
AC Milan v Sampdoria (6pm)
Juventus v Cagliari (6pm)
Atalanta v Parma (6pm)
Lecce v Udinese (9pm)
Napoli v Inter Milan (11.45pm)
UAE currency: the story behind the money in your pockets
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
