The Federal Reserve is on the cusp of cutting US interest rates in September. A low interest rate environment will typically lead to better borrowing conditions but end the good run for savers, financial experts say.
Whether it is beneficial to wait and watch for more interest rate cuts or act now will depend on your specific financial circumstances, they advise.
“For example, it is a good idea to act now if you have high-interest debt,” says David Denton, technical consultant at investment management firm Quilter Cheviot.
“Although there may be more cuts on the way, it is never wise to let debts continue to pile up, so making the most of a rate cut sooner rather than later is wise.
“However, while it is good to take advantage of broader macro-economic conditions if you can, it is not sensible to plan your finances solely around things like rate cuts, which are out of your control.”
The Federal Reserve may begin cutting interest rates for the first time in four years at its meeting on September 17 and 18.
Most central banks in the GCC follow the Fed's policy rate moves due to their currencies being pegged to the US dollar.
The Federal Open Market Committee has kept the federal funds rate at 5.25 per cent to 5.5 per cent since July 2023, but markets are now heavily favouring a quarter-point cut in September.
Expectations of a rate cut are based on the continuing cooling in inflation at all levels in the US.
The Consumer Price Index (CPI) report from July 15 showed a 0.1 per cent drop in prices for June and a modest 3 per cent year-on-year increase.
Inflation in the US had reached a 40-year high of 9.1 per cent in June 2022.
“Awareness is key,” says Carol Glynn, founder of Conscious Finance Coaching. “Knowing it is coming, then look at the areas of your finances it will likely impact.”
“Do you have debt or savings? Then you will be impacted.
“Are you planning to buy a home or take out a loan? Then you will be impacted.”
Lower interest rates mean a range of personal finance products – from loans to credit cards, mortgages and savings – will be affected and borrowing will become less expensive. Here is a look at how consumers can prepare their finances:
Mortgages
A Fed rate cut makes it a good time to refinance existing mortgages or lock in a new, lower fixed-rate loan.
The cut will probably lower interest rates on new mortgages and refinancing options, according to Ben Bolger, a financial planner in Abu Dhabi and co-founder of digital learning platform Squirrel Education.
“This means lower monthly payments for borrowers, making home ownership and refinancing existing mortgages more affordable,” he says.
“Homeowners could consider refinancing to secure a lower rate and reduce their overall interest expense over the life of the loan.”
However, it is important to factor in the costs of refinancing as this may erase any benefits of a lower rate, he warns.
Homeowners can save significantly on interest payments over the life of their loans, increasing disposable income for other investments or savings, Quilter Cheviot’s Mr Denton says.
However, given how much rates have had to climb, he believes it is unlikely that the first cut in rates will have a big impact.
“Mortgage rates are determined by swap rates, which are the interest rates that lenders pay to offset the risk of fixed-rate lending,” he says.
“Swap rates are a major contributing factor to the final mortgage rate offered to a homeowner and these rates often price in the cost of an interest-rate cut far before the event actually happens.”
Fixed-rate mortgage holders will not see a change until their fixed terms have expired.
But there might be an opportunity to lock in lower rates if you have a high-interest mortgage, Ms Glynn suggests.
“Research switching from a variable to a fixed-rate mortgage during times of lower interest rates to stabilise payments and lock in savings on interest,” Ms Glynn recommends.
“But be patient, it may take months, if not years, to see a material impact on rates unless the Fed makes unexpected large interest rate cuts.”
Credit cards
Interest rates on credit card balances typically decrease following a Fed rate cut, Mr Bolger says.
While this reduces the cost of carrying a balance, consumers should still aim to pay off high-interest debt quickly to avoid accumulating more interest charges, he warns.
“Consumers should consider transferring balances to lower-rate cards and paying down high-interest debt more aggressively to take advantage of reducing rates,” Mr Denton says.
However, it is not guaranteed that banks may pass on the interest rate cut to their customers, according to Ms Glynn.
Pay down as much of your credit card debt as possible now, regardless of interest rate, as even in low Fed interest rate periods, credit cards are still extremely expensive forms of debt, she says.
Watch: US Federal Reserve keeps interest rates on hold
Loans
Interest rates on car and personal loans are also likely to decrease, making borrowing cheaper.
This could spur consumer spending in these categories, as lower monthly payments increase affordability, according to Mr Bolger.
Ms Glynn suggests waiting to get a car or personal loan to get better terms after the rate cut.
Shop around for the best deals as rates can vary widely, she says, and it may take time for the rate cuts to trickle down to the consumer.
“But also be aware, lower interest rates tend to create more demand and so can increase prices, which often offset the benefits lower interest rates bring,” she adds.
Savings
The yield on savings accounts, certificates of deposit and other interest-bearing deposit accounts will probably decline, Mr Bolger believes.
Savers may see reduced returns on their deposits, which could prompt a search for higher-yielding investment alternatives, such as bonds or dividend-paying stocks, he says.
Realistically, how much you will save when the Fed lowers rates will depend on how quickly it cuts and by how much each time, he adds.
“A rate cut generally leads to lower interest rates on savings accounts, meaning people will earn less interest,” Mr Denton says.
“Despite many people perceiving cash as safe, unless you are making an inflation-beating return, you will be losing money in real terms constantly.
“Savers, therefore, might consider other investment options to achieve higher returns and help ensure their money does not essentially decay.”
A rate cut generally leads to lower interest rates on savings accounts, meaning people will earn less interest on their savings
David Denton,
technical consultant, Quilter Cheviot
Diversifying into higher-yield investments, such as bonds or stocks, could offer better growth potential but this comes with added risk, he warns.
If you have cash that will not be needed for the coming year or more, consider locking in higher rates with long-term savings products like fixed-term deposits before the rates decrease, Ms Glynn recommends.
Which countries will be affected more?
The US is naturally directly impacted as the Fed’s decisions primarily affect its economy first, says Ms Glynn.
“In countries with currencies pegged to the US dollar, like many countries in the Middle East, including the UAE, monetary policies in these countries often mirror those of the US and so they will also be affected,” she says.
“Any country with US dollar debt or [that] operates trade in USD, will also be impacted. Fed interest rates influence global financial markets, affecting trade, investment and economic stability worldwide.”
Regions with higher dependency on US trade and financial systems, such as Europe and emerging markets, will be more affected by the Fed’s rate cut, according to Mr Denton.
These areas might experience capital inflows, currency appreciation and changes in their own central bank policies to align with the Fed’s actions, he states.
Conversely, regions with less direct economic linkage to the US might see more subdued effects.
“North America, Canada and Mexico will likely experience larger impacts due to their strong economic connections with the US and the USMCA (United States-Mexico-Canada) trade agreement,” Mr Bolger says.
“In addition, emerging markets with substantial dollar-denominated debt may face increased financial volatility and currency fluctuations.
“A Fed rate cut may initially ease their debt servicing costs, as borrowing in dollars becomes cheaper due to lower interest rates.
“This can provide short-term relief for many countries such as Turkey, Argentina and South Africa, which have significant amounts of debt issued in US dollars.”
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
ACL Elite (West) - fixtures
Monday, Sept 30
Al Sadd v Esteghlal (8pm)
Persepolis v Pakhtakor (8pm)
Al Wasl v Al Ahli (8pm)
Al Nassr v Al Rayyan (10pm)
Tuesday, Oct 1
Al Hilal v Al Shorta (10pm)
Al Gharafa v Al Ain (10pm)
Mohammed bin Zayed Majlis
UAE currency: the story behind the money in your pockets
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
The five new places of worship
Church of South Indian Parish
St Andrew's Church Mussaffah branch
St Andrew's Church Al Ain branch
St John's Baptist Church, Ruwais
Church of the Virgin Mary and St Paul the Apostle, Ruwais
FIXTURES
All times UAE ( 4 GMT)
Friday
Saint-Etienne v Montpellier (10.45pm)
Saturday
Monaco v Caen (7pm)
Amiens v Bordeaux (10pm)
Angers v Toulouse (10pm)
Metz v Dijon (10pm)
Nantes v Guingamp (10pm)
Rennes v Lille (10pm)
Sunday
Nice v Strasbourg (5pm)
Troyes v Lyon (7pm)
Marseille v Paris Saint-Germain (11pm)
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Killing of Qassem Suleimani
The years Ramadan fell in May
EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
More on animal trafficking
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
KILLING OF QASSEM SULEIMANI
UAE rugby season
FIXTURES
West Asia Premiership
Dubai Hurricanes v Dubai Knights Eagles
Dubai Tigers v Bahrain
Jebel Ali Dragons v Abu Dhabi Harlequins
UAE Division 1
Dubai Sharks v Dubai Hurricanes II
Al Ain Amblers v Dubai Knights Eagles II
Dubai Tigers II v Abu Dhabi Saracens
Jebel Ali Dragons II v Abu Dhabi Harlequins II
Sharjah Wanderers v Dubai Exiles II
LAST SEASON
West Asia Premiership
Winners – Bahrain
Runners-up – Dubai Exiles
UAE Premiership
Winners – Abu Dhabi Harlequins
Runners-up – Jebel Ali Dragons
Dubai Rugby Sevens
Winners – Dubai Hurricanes
Runners-up – Abu Dhabi Harlequins
UAE Conference
Winners – Dubai Tigers
Runners-up – Al Ain Amblers
Mohammed bin Zayed Majlis
SPEC%20SHEET%3A%20APPLE%20IPAD%20(2022)
%3Cp%3E%3Cstrong%3EDisplay%3A%3C%2Fstrong%3E%2010.9-inch%20Liquid%20Retina%20IPS%20LCD%2C%202%2C360%20x%201%2C640%2C%20264ppi%2C%20wide%20colour%2C%20True%20Tone%2C%20Apple%20Pencil%201%20support%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EChip%3A%3C%2Fstrong%3E%20Apple%20A14%20Bionic%2C%206-core%20CPU%2C%204-core%20GPU%2C%2016-core%20Neural%20Engine%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStorage%3A%3C%2Fstrong%3E%2064GB%2F256GB%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EPlatform%3A%3C%2Fstrong%3E%20iPadOS%2016%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EMain%20camera%3A%3C%2Fstrong%3E%2012-megapixel%20wide%2C%20f%2F1.8%2C%205x%20digital%2C%20Smart%20HDR%203%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EVideo%3A%3C%2Fstrong%3E%204K%20%40%2024%2F25%2F30%2F60fps%2C%20full%20HD%20%40%2025%2F30%2F60fps%2C%20slo-mo%20%40%20120%2F240fps%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFront%20camera%3A%3C%2Fstrong%3E%2012MP%20ultra-wide%2C%20f%2F2.4%2C%202x%2C%20Smart%20HDR%203%2C%20Centre%20Stage%3B%20full%20HD%20%40%2025%2F30%2F60fps%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EAudio%3A%3C%2Fstrong%3E%20Stereo%20speakers%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBiometrics%3A%3C%2Fstrong%3E%20Touch%20ID%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EI%2FO%3A%3C%2Fstrong%3E%20USB-C%2C%20smart%20connector%20(for%20folio%2Fkeyboard)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBattery%3A%3C%2Fstrong%3E%20Up%20to%2010%20hours%20on%20Wi-Fi%3B%20up%20to%209%20hours%20on%20cellular%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFinish%3A%3C%2Fstrong%3E%20Blue%2C%20pink%2C%20silver%2C%20yellow%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIn%20the%20box%3A%3C%2Fstrong%3E%20iPad%2C%20USB-C-to-USB-C%20cable%2C%2020W%20power%20adapter%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20Wi-Fi%20%E2%80%94%20Dh1%2C849%20(64GB)%20%2F%20Dh2%2C449%20(256GB)%3B%20cellular%20%E2%80%94%20Dh2%2C449%20(64GB)%20%2F%20Dh3%2C049%20(256GB)%3C%2Fp%3E%0A
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Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Astra%20Tech%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EMarch%202022%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3EAbdallah%20Abu%20Sheikh%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20technology%20investment%20and%20development%3Cbr%3E%3Cstrong%3EFunding%20size%3A%3C%2Fstrong%3E%20%24500m%3C%2Fp%3E%0A
Mohammed bin Zayed Majlis
EXPATS
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Lulu%20Wang%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Nicole%20Kidman%2C%20Sarayu%20Blue%2C%20Ji-young%20Yoo%2C%20Brian%20Tee%2C%20Jack%20Huston%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
PROVISIONAL FIXTURE LIST
Premier League
Wednesday, June 17 (Kick-offs uae times) Aston Villa v Sheffield United 9pm; Manchester City v Arsenal 11pm
Friday, June 19 Norwich v Southampton 9pm; Tottenham v Manchester United 11pm
Saturday, June 20 Watford v Leicester 3.30pm; Brighton v Arsenal 6pm; West Ham v Wolves 8.30pm; Bournemouth v Crystal Palace 10.45pm
Sunday, June 21 Newcastle v Sheffield United 2pm; Aston Villa v Chelsea 7.30pm; Everton v Liverpool 10pm
Monday, June 22 Manchester City v Burnley 11pm (Sky)
Tuesday, June 23 Southampton v Arsenal 9pm; Tottenham v West Ham 11.15pm
Wednesday, June 24 Manchester United v Sheffield United 9pm; Newcastle v Aston Villa 9pm; Norwich v Everton 9pm; Liverpool v Crystal Palace 11.15pm
Thursday, June 25 Burnley v Watford 9pm; Leicester v Brighton 9pm; Chelsea v Manchester City 11.15pm; Wolves v Bournemouth 11.15pm
Sunday June 28 Aston Villa vs Wolves 3pm; Watford vs Southampton 7.30pm
Monday June 29 Crystal Palace vs Burnley 11pm
Tuesday June 30 Brighton vs Manchester United 9pm; Sheffield United vs Tottenham 11.15pm
Wednesday July 1 Bournemouth vs Newcastle 9pm; Everton vs Leicester 9pm; West Ham vs Chelsea 11.15pm
Thursday July 2 Arsenal vs Norwich 9pm; Manchester City vs Liverpool 11.15pm
The years Ramadan fell in May
Zayed Sustainability Prize
KILLING OF QASSEM SULEIMANI
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
The five pillars of Islam
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Zayed Sustainability Prize
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Day 1, Abu Dhabi Test: At a glance
Moment of the day Dimuth Karunaratne had batted with plenty of pluck, and no little skill, in getting to within seven runs of a first-day century. Then, while he ran what he thought was a comfortable single to mid-on, his batting partner Dinesh Chandimal opted to stay at home. The opener was run out by the length of the pitch.
Stat of the day – 1 One six was hit on Day 1. The boundary was only breached 18 times in total over the course of the 90 overs. When it did arrive, the lone six was a thing of beauty, as Niroshan Dickwella effortlessly clipped Mohammed Amir over the square-leg boundary.
The verdict Three wickets down at lunch, on a featherbed wicket having won the toss, and Sri Lanka’s fragile confidence must have been waning. Then Karunaratne and Chandimal's alliance of precisely 100 gave them a foothold in the match. Dickwella’s free-spirited strokeplay meant the Sri Lankans were handily placed at 227-4 at the close.
UAE currency: the story behind the money in your pockets
PRESIDENTS CUP
Draw for Presidents Cup fourball matches on Thursday (Internationals first mention). All times UAE:
02.32am (Thursday): Marc Leishman/Joaquin Niemann v Tiger Woods/Justin Thomas
02.47am (Thursday): Adam Hadwin/Im Sung-jae v Xander Schauffele/Patrick Cantlay
03.02am (Thursday): Adam Scott/An Byeong-hun v Bryson DeChambeau/Tony Finau
03.17am (Thursday): Hideki Matsuyama/CT Pan v Webb Simpson/Patrick Reed
03.32am (Thursday): Abraham Ancer/Louis Oosthuizen v Dustin Johnson/Gary Woodland
UAE currency: the story behind the money in your pockets
Read more about the coronavirus
The specs
Engine: Turbocharged four-cylinder 2.7-litre
Power: 325hp
Torque: 500Nm
Transmission: 10-speed automatic
Price: From Dh189,700
On sale: now
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
if you go
The flights
Emirates have direct flights from Dubai to Glasgow from Dh3,115. Alternatively, if you want to see a bit of Edinburgh first, then you can fly there direct with Etihad from Abu Dhabi.
The hotel
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Located in the heart of Mackintosh's Glasgow, the Dakota Deluxe is perhaps the most refined hotel anywhere in the city. Doubles from Dh850
|
Events and tours
There are various Mackintosh specific events throughout 2018 – for more details and to see a map of his surviving designs see glasgowmackintosh.com
For walking tours focussing on the Glasgow Style, see the website of the Glasgow School of Art.
More information
For ideas on planning a trip to Scotland, visit www.visitscotland.com
ICC Awards for 2021
MEN
Cricketer of the Year – Shaheen Afridi (Pakistan)
T20 Cricketer of the Year – Mohammad Rizwan (Pakistan)
ODI Cricketer of the Year – Babar Azam (Pakistan)
Test Cricketer of the Year – Joe Root (England)
WOMEN
Cricketer of the Year – Smriti Mandhana (India)
ODI Cricketer of the Year – Lizelle Lee (South Africa)
T20 Cricketer of the Year – Tammy Beaumont (England)
Killing of Qassem Suleimani
Teaching your child to save
Pre-school (three - five years)
You can’t yet talk about investing or borrowing, but introduce a “classic” money bank and start putting gifts and allowances away. When the child wants a specific toy, have them save for it and help them track their progress.
Early childhood (six - eight years)
Replace the money bank with three jars labelled ‘saving’, ‘spending’ and ‘sharing’. Have the child divide their allowance into the three jars each week and explain their choices in splitting their pocket money. A guide could be 25 per cent saving, 50 per cent spending, 25 per cent for charity and gift-giving.
Middle childhood (nine - 11 years)
Open a bank savings account and help your child establish a budget and set a savings goal. Introduce the notion of ‘paying yourself first’ by putting away savings as soon as your allowance is paid.
Young teens (12 - 14 years)
Change your child’s allowance from weekly to monthly and help them pinpoint long-range goals such as a trip, so they can start longer-term saving and find new ways to increase their saving.
Teenage (15 - 18 years)
Discuss mutual expectations about university costs and identify what they can help fund and set goals. Don’t pay for everything, so they can experience the pride of contributing.
Young adulthood (19 - 22 years)
Discuss post-graduation plans and future life goals, quantify expenses such as first apartment, work wardrobe, holidays and help them continue to save towards these goals.
* JP Morgan Private Bank
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
KILLING OF QASSEM SULEIMANI
Korean Film Festival 2019 line-up
Innocent Witness, June 26 at 7pm
On Your Wedding Day, June 27 at 7pm
The Great Battle, June 27 at 9pm
The Witch: Part 1. The Subversion, June 28 at 4pm
Romang, June 28 at 6pm
Mal Mo E: The Secret Mission, June 28 at 8pm
Underdog, June 29 at 2pm
Nearby Sky, June 29 at 4pm
A Resistance, June 29 at 6pm
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Scoreline
Arsenal 0 Manchester City 3
- Agüero 18'
- Kompany 58'
- Silva 65'
CREW
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