Gulf central banks poised for 1% rate cut amid Fed's expected moves under Trump
Capital Economics’ assumption under a Harris presidency was that basis points would fall by 1.5% between now and May 1, compared with a predicted 1% under Trump.
Gulf central banks are expected to cut interest rates by 1% — or 100 basis points — by May 1, 2025, in anticipation of policy shifts under the upcoming presidency of Donald Trump, according to projections from London-based research firm Capital Economics. This cut would be half a percentage point higher than under a Kamala Harris administration, an economist from the firm told Al-Monitor.
James Swanston, an economist with Capital Economics’ emerging markets team, stated that his firm anticipates both the US Federal Reserve and Gulf central banks to lower rates by 100 bps by the May 1, 2025, Fed meeting, with gradual cuts of 25 bps at each monthly meeting leading up to that date.
“The Fed fund rate is currently at 4.5-4.75%, and we project it bottoming out at 3.5-3.75% by May,” Swanston explained.
In the Nov. 5 election, Republican Donald Trump defeated Democratic opponent Kamala Harris, securing more than the required 270 electoral college votes. Trump is set to begin his second term as president on Jan. 20, 2025.
