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Following the actions of the US Federal Reserve, the central banks of the UAE, Saudi Arabia and Bahrain lowered their interest rates by 25 basis points, or a quarter of a percentage point, effective August 1, 2019.
Due to their currency peg to the US dollar, these Gulf countries generally mirror interest rate action taken in the US. As Kuwait’s currency is pegged to a basket of international currencies, it left its interest rates unchanged.
Any interest rate reductions lower the cost of borrowing for customers, positively impacting interest rate sensitive sectors such as automotive and real estate. Customers can now avail reduced rates on loans, mortgages and credit cards.
The US Fed has resorted to a rate cut for the first time in over 10 years to mitigate the risks of a possible economic slowdown. Should the central bank see any further risks to economic growth, it may lower rates further during the year, with some central banks in the Gulf following suit.
Rate cuts are generally undertaken to give a boost to economic growth while encouraging customer and corporate spending. On the other hand, for banks, lower interest rates impact their earnings as they earn higher interest income when rates are high.
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Sarah-Jane Carter
BA (Hons) DipM
Head of Marketing
Sarah-Jane joined Cavendish Maxwell in January 2020 as Head of Marketing and is responsible for the development of the marketing strategy and execution across the Middle East region. An energetic and results driven marketer, Sarah-Jane possesses a wealth of multi-channel marketing experience, within both B2B and B2C environments which she has gained over a 25 year career. Prior to joining Cavendish Maxwell, Sarah-Jane held senior marketing positions for major developers in Dubai including Emaar, Dubai Properties and Dubai Sports City. She also worked for IWG as the Regional Marketing Director responsible for the MEA and APAC regions. Before relocating to the UAE in 2005, Sarah-Jane held various management roles in public and private sector companies in the UK including ten years at Royal Mail and seven years at the Bank of America.
Sarah-Jane is a member of the Chartered Institute of Marketing and has a BA(Hons) Degree in Business and Marketing
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