The U.S. Federal Reserve’s upcoming interest rate cuts are expected to affect Gulf economies, as their central banks are tied to the dollar through fixed exchange rates. According to Capital Economics, Gulf central banks will be compelled to lower rates alongside the Fed, reducing debt servicing costs and possibly increasing credit demand. However, the overall impact on growth is expected to be minimal.

Key effects include lower borrowing costs for businesses and households, which could provide some financial relief. Yet, despite these rate cuts, credit growth will likely remain limited, with oil prices being the main driver of economic growth in the region. Non-oil GDP growth is expected to slow as fiscal policies become less supportive.

https://www.investing.com/news/economy/how-will-the-fed-loosening-cycle-impact-the-gulf-3621517