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How will the Fed loosening cycle impact the Gulf?

The US Federal Reserve looks certain to start its loosening cycle this evening and, by virtue of their dollar pegs and open capital accounts, central banks across the Gulf will follow suit. Lower interest rates may provide relief to firms and households in the form of lower debt servicing costs and, at the margin, may support a pick-up in new lending. But there are reasons to think the boost to growth won’t be large.

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