UAE Borrowing Costs Set to Stay High Amid US Rate Hike

The US Federal Reserve's recent interest rate hike is expected to have far-reaching implications for borrowing costs in the UAE. The Fed raised rates by 25 basis points, bringing the target range to 3.75% to 4.0%. Markets had anticipated this move, with expectations running above 90% going into the meeting.

Hamza Dweik, head of trading for Mena at Saxo Bank, believes that financing costs will remain elevated due to the UAE's currency peg to the US dollar. He expects borrowing costs across the UAE to stay high well into 2027.

Lale Akoner, global market strategist at eToro, notes that consumers will feel the impact through more expensive credit cards and auto loans. However, she also suggests that higher borrowing costs may eventually take some heat out of spending and hiring.