Dubai: The US Federal Reserve went ahead with its second interest rate hike of 2023, by another 0.25 per cent, and which will soon be reflected on lending rates in the UAE and other Gulf markets. This is now the ninth rate increase by the Fed since March 2022 as global economies try to slow down inflationary gains.

Until about 48 hours ago, there were some who believed that the Fed would avoid a rate increase this month given the shake up the global banking sector has been through after the troubles at Silicon Valley Bank and the subsequent turmoil at Credit Suisse. But the forceful intervention by the other Swiss bank UBS, which bought Credit Suisse last Sunday (March 19), and coordinated actions by central banks managed to hold off further alarms.

For UAE businesses, the latest hike would mean being extra watchful on their expenses through the coming months – and keep waiting for the Fed to bring to a halt more rate hikes. Just as important, they need to see when the Fed will start on bringing down rates. (These actions will then be repeated by the UAE central bank and its peers in the Gulf.)