GCC Central Banks Cut Interest Rates After the U.S. Fed’s Move
Central banks across the Gulf Cooperation Council (GCC) have reduced their key interest rates by 25 basis points, following the U.S. Federal Reserve’s second straight rate cut this month. The move is expected to support economic growth and make borrowing cheaper across the region.
GCC Rate Cuts
The Central Bank of the UAE (CBUAE) lowered its base rate on the overnight deposit facility from 4.15% to 3.9%, as announced in a statement on X (formerly Twitter).
The Qatar Central Bank also reduced its main rates — the deposit rate to 4.1%, the lending rate to 4.6%, and the repo rate to 4.35%.
Meanwhile, the Central Bank of Bahrain cut its overnight interest rate to 4.5%.
These changes came immediately after the U.S. Federal Reserve lowered its own rates, as GCC countries often follow U.S. monetary policy due to their currencies being pegged to the U.S. dollar.
Economic Outlook for the GCC
The outlook for the GCC economies remains strong. According to a recent Oxford Economics report, consumer spending in the region is expected to grow by 3.4% per year over the next five years — about double the growth rate of 1.7% expected in advanced economies.
Gross Domestic Product (GDP) growth in the GCC is forecast to reach 4.1% in 2025 and 4.6% in 2026, much higher than the 1.6% and 1.4% growth expected in developed nations.
Lower interest rates are expected to boost spending by reducing the cost of borrowing for mortgages, car loans, and personal credit. This gives households more disposable income and encourages higher consumption.
In Saudi Arabia, personal lending has bounced back after a slowdown in 2023, which followed a lending boom during the pandemic.
In the UAE, private-sector retail loans have surged by more than 50% since January 2022, maintaining double-digit growth since late 2023.
The Federal Reserve’s Decision
The U.S. Federal Reserve approved its second consecutive interest rate cut on Wednesday, despite uncertainty caused by the ongoing government shutdown.
The Federal Open Market Committee (FOMC) voted 10-2 in favor of lowering the benchmark overnight rate to a range of 3.75%–4%.
The decision was widely expected, as inflation pressures have eased and the Fed aims to support economic growth amid signs of slowing activity.
What to Expect Next
Investors now believe that the Fed could announce another 25-basis-point rate cut in its final meeting of the year in December. If that happens, U.S. interest rates would fall to a range of 3.5%–3.75%, according to CME’s FedWatch Tool.
For the GCC, any further Fed rate cuts are likely to lead to additional reductions across the region’s central banks.
This could further lower borrowing costs, support business investment, and help sustain strong economic growth across Gulf economies that are already benefiting from high energy revenues, tourism recovery, and ongoing diversification efforts.
Published: 30th October 2025
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