Kevin Warsh faces an immediate test as he assumes the chairmanship at the US Federal Reserve: navigating the tension between higher interest rates and political pressure from President Donald Trump.
How he steers the American central bank’s monetary policy in the face of White House pressure could determine what kind of Fed chair he will be for markets in the US and in the Gulf.
“That distinction matters more in the Gulf than in many other regions because Gulf economies do not simply watch the Fed. They import a large part of US monetary policy through dollar pegs, bank funding costs and dollar liquidity,” said Ahmed Azzam, head of market research at Equiti Group.
Because its dirham is pegged to the US dollar, the UAE Central Bank this year has kept its base rate unchanged at 3.65 per cent. The base rate influences the Emirates Interbank Offered Rate (Eibor) that is used for…
