US Federal Reserve hikes interest rates by another 0.75%, UAE central bank expected to follow suit

US Federal Reserve hikes interest rates by another 0.75%, UAE central bank expected to follow suit

Dubai: The US Federal reserve has gone in for a 0.75 per cent hike - and not the 0.50 per cent increase that was widely expected - in aggressive efforts to tamp down inflation. For the US, this is the biggest such increase since 1994. The Fed will go in for another rate increase next month as bringing inflation down becomes the overriding priority. The UAE central bank has matched the increase, with the new rates becoming efefctive from tomorrow (June 16), and this will add to the cost of loans for individuals and businesses. From a consumer and business perspective, it would require some deft handling to balance the cost of raising funds on one side and countering the headwinds of inflation on the other. For UAE consumers, this will mean higher interest rate payouts on their loans and mortgages, especially for those who are doing so on a floating rate basis. Currencies will likely see some heavy action in the hours ahead, while Asian markets will offer the first whiff of how investors have taken the US Fed action. “Foreign selling of Southeast Asian stocks and other assets had (already) intensified (in recent days), weakening their currencies,” said