The Federal Reserve has decided to keep interest rates steady, meaning there will be no changes in this area for now. The median forecast for rate cuts remains unchanged from December, with expectations of two rate cuts being the central projection. Additionally, the Fed is slowing its Treasury runoff, a part of quantitative tightening, to $5 billion per month.
The unemployment rate forecast has slightly increased to 4.4% this year, up from 4.3% in December. Regarding inflation, policymakers now expect both headline and core prices to rise at a faster pace than previously anticipated. A significant update is the revision to GDP forecasts, which indicates faster inflation coupled with weaker growth, leading to greater economic uncertainty.
The UAE Central Bank is also expected to maintain steady rates, which may mean borrowers will not see relief on their loans in the near future. However, due to the strong growth of the non-oil sector, the UAE economy remains relatively insulated from global uncertainties. In other words, the UAE is likely to serve as a safe haven. Furthermore, the strong dollar is expected to benefit UAE consumers by protecting them from the adverse effects of global inflation.
