Market watchers will closely follow the US Federal Reserve's decision on interest rates on Wednesday, as US President Donald Trump's policies continue to cast uncertainty over the economic outlook.
Inflation is still above the central bank's 2 per cent target and traders widely anticipate the Fed to hold its target interest rate range steady at 4.25 to 4.50 per cent, according to CMEGroup data.
However, there are still several developments Fed watchers will be paying attention to – not least chairman Jerome Powell's news conference. The Fed will release its announcement at 2pm eastern time – 10pm UAE time – and Mr Powell is due to speak to reporters 30 minutes later.
The 'dot plot'
Traders will be closely watching the Fed's latest economic projections for their interest rate forecasts. The Fed updates its economic projections every three months.
Projections released in December showed that the median Fed official projected lowering the federal funds rate to 3.9 per cent by the end of this year before lowering it further to 3.4 per cent in 2026 and 3.1 per cent in 2027. Those projections were raised from their September forecasts.
Drawing most of the attention will be the “dot plot”, which shows where every Fed member anticipates interest rates will drop at the end of the year. Ten Fed officials projected rates would fall between 3.75 and 4 per cent by the end of 2025.
“We don’t expect a major shift although the Fed may want to reflect current market expectations by pushing the 2025 median estimate slightly lower,” Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management, said in a note.
Fed officials will also update the latest projections on economic growth, the unemployment rate and their preferred inflation metric. But the Fed will be making these projections against an uncertain backdrop.
“The underlying macro forecast is likely to be dragged in two directions: a slightly firmer inflation outlook and a slightly weaker real-side outlook,” Derek Tang, economist at LH Meyer, said in a note.
Powell remarks
Perhaps gaining the greatest attention on Wednesday will be Mr Powell's press conference. The Fed chairman will likely be grilled by financial reporters on the central bank's views on forward guidance, Fed independence and the uncertainty of the effects of Mr Trump's policies.
Those uncertainties have caused turmoil in markets over recession fears. Still, he maintained an optimistic posture heading into the Fed's most recent period of silence.
“We are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry, and are well positioned to wait for greater clarity,” he said in prepared remarks at a conference in New York on March 7.
Mr Powell has also maintained that the economy remains “in a good place” despite the elevated uncertainty surrounding the Trump administration's policies on trade, immigration, fiscal policy and regulation.
Tariffs could have just a one-time inflationary effect, but that could change if there are a series of levies, he said at the time.
“What really would matter is what’s happening with longer-term inflation expectations and how persistent are the inflationary effects,” he said.
Quantitative tightening
The Fed could also provide clues or decisions on quantitative tightening or reducing its balance sheet. The Fed has reduced the size of its balance sheet by about $2.2 trillion since 2022.
The US Treasury Department began enacting “extraordinary measures” in January to avoid a US default. Some estimates suggest that the X-date, or the day the government would not be able to repay its debt, will not be until this summer. Congress is tasked with raising the debt ceiling, which currently stands at $31.4 trillion.
John Canavan, lead analyst at Oxford Economics, said Congress's lack of urgency in tackling the debt ceiling could make the Fed more cautious in reducing the size of its balance sheet, “encouraging the committee to pause this month”.
Minutes released from the January meeting showed that “several participants suggest halting or slowing balance sheet reduction pending debt ceiling resolution”.
England-South Africa Test series
1st Test England win by 211 runs at Lord's, London
2nd Test South Africa win by 340 runs at Trent Bridge, Nottingham
3rd Test July 27-31 at The Oval, London
4th Test August 4-8 at Old Trafford, Manchester
Killing of Qassem Suleimani
The specs
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Power: 579hp
Torque: 859Nm
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Asia Cup 2018 Qualifier
Sunday's results:
- UAE beat Malaysia by eight wickets
- Nepal beat Singapore by four wickets
- Oman v Hong Kong, no result
Tuesday fixtures:
- Malaysia v Singapore
- UAE v Oman
- Nepal v Hong Kong
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
Saudi Cup race day
Schedule in UAE time
5pm: Mohamed Yousuf Naghi Motors Cup (Turf), 5.35pm: 1351 Cup (T), 6.10pm: Longines Turf Handicap (T), 6.45pm: Obaiya Arabian Classic for Purebred Arabians (Dirt), 7.30pm: Jockey Club Handicap (D), 8.10pm: Samba Saudi Derby (D), 8.50pm: Saudia Sprint (D), 9.40pm: Saudi Cup (D)
Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
RACE CARD
4pm Al Bastakiya – Listed (TB) $150,000 (Dirt) 1,900m
4.35pm Dubai City Of Gold – Group 2 (TB) $228,000 (Turf) 2,410m
5.10pm Mahab Al Shimaal – Group 3 (TB) $228,000 (D) 1,200m
5.45pm Burj Nahaar – Group 3 (TB) $228,000 (D) 1,600m
6.20pm Jebel Hatta – Group 1 (TB) $260,000 (T) 1,800m
6.55pm Al Maktoum Challenge Round-1 – Group 1 (TB) $390,000 (D) 2,000m
7.30pm Nad Al Sheba – Group 3 (TB) $228,000 (T) 1,200m
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'Brazen'
Director: Monika Mitchell
Starring: Alyssa Milano, Sam Page, Colleen Wheeler
Rating: 3/5
England squads for Test and T20 series against New Zealand
Test squad: Joe Root (capt), Jofra Archer, Stuart Broad, Rory Burns, Jos Buttler, Zak Crawley, Sam Curran, Joe Denly, Jack Leach, Saqib Mahmood, Matthew Parkinson, Ollie Pope, Dominic Sibley, Ben Stokes, Chris Woakes
T20 squad: Eoin Morgan (capt), Jonny Bairstow, Tom Banton, Sam Billings, Pat Brown, Sam Curran, Tom Curran, Joe Denly, Lewis Gregory, Chris Jordan, Saqib Mahmood, Dawid Malan, Matt Parkinson, Adil Rashid, James Vince
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
A Long Way Home by Peter Carey
Faber & Faber
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Tips for used car buyers
- Choose cars with GCC specifications
- Get a service history for cars less than five years old
- Don’t go cheap on the inspection
- Check for oil leaks
- Do a Google search on the standard problems for your car model
- Do your due diligence. Get a transfer of ownership done at an official RTA centre
- Check the vehicle’s condition. You don’t want to buy a car that’s a good deal but ends up costing you Dh10,000 in repairs every month
- Validate warranty and service contracts with the relevant agency and and make sure they are valid when ownership is transferred
- If you are planning to sell the car soon, buy one with a good resale value. The two most popular cars in the UAE are black or white in colour and other colours are harder to sell
Tarek Kabrit, chief executive of Seez, and Imad Hammad, chief executive and co-founder of CarSwitch.com
